Quantcast

Mostly Vacant Hotels Drive Destruction of Commercial Real Estate Values

(Economic Policy Journal) Commercial properties hit by the economic effects of coronavirus related lockdowns could have lost one-quarter of their value or more, reports the Financial Times.

Properties that have gotten into trouble are being written down by 27 percent on average, data from Wells Fargo shows.

The paper reports on the problems in the hotel sector:

Recent examples show hotels being especially hard hit, given the collapse in tourism and business travel. A Crowne Plaza hotel in Houston was valued at $25.9m this month, down 46 per cent from when it was bundled into a CMBS deal in 2014. The hotel, which sits just off the Katy Freeway has not paid its mortgage since March and was transferred to the special servicer in May. 

The Holiday Inn La Mirada, about 20 minutes drive from the centre of Los Angeles, was recently valued at $22.1m, down 27 per cent since it was securitised in 2015, having not paid its mortgage since April. Another Holiday Inn in Columbia, Tennessee, had its appraised value cut by 37 per cent this month to $7.7m.

Don’t let anyone tell you how this all plays out. No one knows.

The departures from high tax, heavily regulated cities and states may mean that some properties never recover.

The post-lockdown economic environment remains unclear.

It makes sense for employers who can efficiently monitor employees who work from home to encourage them to do so. The lockdowns have taught firms this. It saves on office space and saves on the burden of maintaining employees in high-cost regions.

TRENDING NOW

Fed’s Easy Money Spurs Financial Frenzies

(Joseph Solis-Mullen, Mises Institute) Though the effective federal funds rate remains less than 0.1 percent, the reaction of the markets and financial press as the ten-year...

SF Walgreens Employee Scared to Work After Attacks by Shoplifters

(KGO-TV San Francisco) On the heels of Walgreens closing five stores in San Francisco due to shoplifting, an employee is speaking out...

Where’s Pete?: Transportation Secretary MIA During Shipping Crisis

(Tony Sifert, Headline USA) During a historic worldwide supply-chain crisis that is largely the result of inadequate shipping needs, Transportation Secretary Pete Buttigieg is nowhere to...

Bitcoin Power Plant Raises Ire of Environmentalists

(Associated Press) An obstacle to large-scale bitcoin mining is finding enough cheap energy to run the huge, power-gobbling computer arrays that create...

Lawyer Implicated in Shootings Knows He’ll Go to Prison for Stealing Money

(Associated Press) The attorney for prominent South Carolina lawyer Alex Murdaugh, who discovered his wife and son dead at their home this...