Real eState
‘All hell is going to break loose’: Property titan and Shark Tank star Barbara Corcoran says Elon Musk is right about commercial office space
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If you’re a commercial property giant, Shark Tank star Barbara Corcoran has some bad news for you: The market is going to get much worse before it gets any better.
In fact, it’s going to be a “bloodbath.”
Corcoran echoed the sentiments of Tesla CEO and Twitter owner, Elon Musk, who earlier this week tweeted: “Commercial real estate is melting down fast.”
Speaking to Fox Business’s The Claman Countdown this week, Corcoran—who sold her New York real estate brokerage for $66 million in 2001—said there isn’t enough confidence in the commercial property market post-pandemic.
Despite mandates from big businesses like Google, Amazon, and most recently Meta, swaths of office blocks across the U.S. are still lying partially empty.
According to data from security provider Kastle the average occupancy of offices across America is at just under 50%—with the New York metropolitan area seeing some of the lowest rates of tenancy.
“No one really believes it’s going to turn the corner,” Corcoran said. “People are staying home. Our best office buildings in Midtown Manhattan are 50% occupied, and in most major cities or in secondary cities, we have a 20% vacancy rate. No one wants to take that chance.”
She added that with turbulent economic times ahead she expects to see more businesses defaulting on their loans or mortgages—an issue which will trickle back to regional banks.
Corcoran’s theory is in line with the data: UBS said in April it expects to see more defaults on real estate loans as a result of an expected credit crunch.
“I don’t see that turning around,” the Shark Tank star said. “I think it’s going to be a bit of a bloodbath before it gets better.”
It’s a crisis Elon Musk has sounded the alarm on multiple times—his warning earlier this week, in response to Craft Ventures founder David Sacks highlighting the level of debt about to mature in the sector, was just the latest.
In March the SpaceX founder responded to a tweet about real estate debt with: “This is by far the most serious looming issue. Mortgages, too.”
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(Bloomberg) —
The troubles facing highly indebted property developers in China have dominated conversations about the Asian nation’s economy and markets this year. Yet according to Rayliant Global Advisors’ Jason Hsu, there’s an important distinction between this housing crisis and previous ones elsewhere: The developers are the ones who are over-leveraged—not households. And that difference is guiding policymakers’ response.Hsu, chief investment officer of Rayliant and a co-founder of Research Affiliates, joined the What Goes Up podcast to discuss China and other emerging markets. “Chinese households are not levered when it comes to real estate,” he says. “They’re not levered because they can buy their first home with money down—and they pay quite a bit money down—and they generally have to sort of have enough income to cover the payment. That bankruptcy you’re seeing in the developer sector is very engineered. On the household side, there’s not a balance-sheet crisis, because they’re not buying real estate on leverage. So they really don’t think there’s a meaningful problem there.”
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