The National Observer | Real Estate Edition | Aug. 19 | Billions in property value loss

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Commercial properties facing the biggest forms of distress have seen their valuations shaved considerably in the past year.

An analysis by The Business Journals found a net total of $6.89 billion in property value has been depleted across 460 properties that secure debt in commercial-mortgage backed securities loan portfolios since August 2021. Fifty-five properties did see an increase in value at reappraisal, although the majority reappraised at less than $1 million higher from when the current loan was initially issued on the property.

Of course, CMBS properties represent only a portion of the broader commercial real estate market but can act as a bellwether of sorts for the entire industry. Tracking reappraised property values among commercial properties flagged by loan servicers is one way to glean which properties, sectors and geographies could face the biggest issues.

Where the pain points are: Hotels and retail, the two property types most affected initially by the pandemic — and most at risk by changes in consumer spending if the economy enters a recession — have seen the most reappraisals in the past year among all sectors. But those who closely track the CMBS market say the office sector is one to watch over the long term, especially as leases expire in the next three or four years.

Here are other top real estate stories from around the ACBJ network:

1. Laura Waxmann at the San Francisco Business Times authored a three-part series on the future of the 5,200-acre Concord Naval Weapons Station in Concord, California, one of the largest and most ambitious projects in the Greater San Francisco area. Check out her stories that go into why plans to revitalize the site have failed to get off the ground, what's been controversial about the project and what could be next for the sprawling site.
2. Fortune 50 health-care giant Centene Corp. canceled plans for a $1 billion, 3,200-job East Coast headquarters in Charlotte, North Carolina, with the company's president citing adoption of remote work as the reason for the decision. The move will leave an 800,000-square-foot office building about to deliver vacant.
3. Adam Neumann, the notorious co-founder of WeWork before resigning as CEO in 2019, is being backed by venture capital giant Andreessen Horowitz in a new venture, Flow, which isn't clearly defined but will have something to do with the apartment market.
4. A new policy in Boston will require real estate developers to disclose their plans for employing minorities, women and/or companies they own in projects of 20,000 square feet or larger — purportedly the first U.S. city to do so.
5. A study in Greater Washington, D.C., suggests new real estate development doesn't always or necessarily displace lower-income residents, and emphasizes continued housing production as necessary for affordability and stability.
6. Home-improvement retailers like Atlanta-based The Home Depot Inc. continue to report strong sales from customers looking to fix up their homes, a boom that's been observed since the onset of the Covid-19 pandemic. Home Depot rival Lowes Cos. Inc. out of Mooresville, North Carolina, saw more mixed results in its recent quarterly earnings.
7. Take a tour of Bethesda, Maryland-based Marriott International Inc.'s new headquarters, which recently opened to employees.
8. Why the Federal Deposit Insurance Corp. is exercising greater scrutiny over commercial real estate lending and how deal flow is holding up these days amid greater economic uncertainty.

Built by Ashley Fahey, editor of The National Observer: Real Estate. Reach me with tips, questions and feedback at afahey@bizjournals.com