By using this site, you agree to the Privacy Policy and Terms of Use.
Accept

News Junction

Notification Show More
Font ResizerAa
  • Home
  • World News
    World NewsShow More
    Why is Germany such a mess? — RT World News
    Why is Germany such a mess? — RT World News
    May 11, 2025
    Pope Leo explains name: AI, worker rights
    Pope Leo explains name: AI, worker rights
    May 11, 2025
    Ukraine and allies urge Putin to commit to a 30-day ceasefire or face new sanctions – National
    Ukraine and allies urge Putin to commit to a 30-day ceasefire or face new sanctions – National
    May 11, 2025
    Mexican-American singer Johnny Rodriguez, whose 1970s country hits topped charts, dies at 73
    Mexican-American singer Johnny Rodriguez, whose 1970s country hits topped charts, dies at 73
    May 11, 2025
    How this ‘generational shift’ impacts fitness, wellness industries
    How this ‘generational shift’ impacts fitness, wellness industries
    May 10, 2025
  • Business
    BusinessShow More
    Ukraine blows up bridges to consolidate its positions in Russia
    Ukraine blows up bridges to consolidate its positions in Russia
    August 18, 2024
    Commentary: AI phones from Google and Apple will erode trust in everything
    Commentary: AI phones from Google and Apple will erode trust in everything
    August 18, 2024
    The most famous Indian Dishes – Insights Success
    The most famous Indian Dishes – Insights Success
    August 18, 2024
    Life on the road as a female long rides cyclist
    Life on the road as a female long rides cyclist
    August 18, 2024
    UK inflation rises to 2.2%
    UK inflation rises to 2.2%
    August 18, 2024
  • Cryptocurrency
    CryptocurrencyShow More
    Bitcoin SV investors attempt to resurrect 2019 Binance lawsuit
    Bitcoin SV investors attempt to resurrect 2019 Binance lawsuit
    May 11, 2025
    Ex-UFC champ Conor McGregor touts Irish Bitcoin reserve in presidential bid
    Ex-UFC champ Conor McGregor touts Irish Bitcoin reserve in presidential bid
    May 11, 2025
    Ethereum, Dogecoin, and Bitcoin Pepe
    Ethereum, Dogecoin, and Bitcoin Pepe
    May 11, 2025
    Taiwan eyes Bitcoin as hedge against inflation and US Treasury exposure
    Taiwan eyes Bitcoin as hedge against inflation and US Treasury exposure
    May 11, 2025
    Cyzens Initiates A New Epoch for Decentralized Media Realm with NFTs
    Cyzens Initiates A New Epoch for Decentralized Media Realm with NFTs
    May 11, 2025
  • Technology
    TechnologyShow More
    How to Improve Your Spotify Recommendations
    How to Improve Your Spotify Recommendations
    August 18, 2024
    X says it’s closing operations in Brazil
    X says it’s closing operations in Brazil
    August 18, 2024
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    August 18, 2024
    Scientists Want to See Videos of Your Cat for a New Study
    Scientists Want to See Videos of Your Cat for a New Study
    August 18, 2024
    OpenAI’s new voice mode let me talk with my phone, not to it
    OpenAI’s new voice mode let me talk with my phone, not to it
    August 18, 2024
  • Entertainment
  • Sports News
  • People
  • Trend
Reading: Trouble continues to mount in the office real estate sector: ‘you can’t get a loan today…there’s no liquidity in the marketplace’
Share
Font ResizerAa

News Junction

  • World News
  • Business
  • Technology
  • Cryptocurrency
  • Trend
  • Entertainment
Search
  • Recent Headlines in Entertainment, World News, and Cryptocurrency – NewsJunction
  • World News
  • Business
  • Cryptocurrency
  • Technology
  • Entertainment
  • Sports News
  • People
  • Trend
Have an existing account? Sign In
Follow US
News Junction > Blog > Business > Trouble continues to mount in the office real estate sector: ‘you can’t get a loan today…there’s no liquidity in the marketplace’
Trouble continues to mount in the office real estate sector: ‘you can’t get a loan today…there’s no liquidity in the marketplace’
Business

Trouble continues to mount in the office real estate sector: ‘you can’t get a loan today…there’s no liquidity in the marketplace’

Published August 7, 2023
Share
8 Min Read
SHARE

Rich Gottlieb has been with Keystone, a Philadelphia-based commercial real estate firm for more than 18 years, and now he’s the company’s president and chief operating officer after a stint as senior vice president. Like countless others, he attributes the distress within the office sector to the widespread shift towards remote work, which has significantly impacted demand. Additionally, the era of inexpensive financing has come to an end, marked by the transition to an economic environment characterized by higher interest rates and stricter credit conditions.

“For an office building, you can’t get a loan today…there’s no liquidity in the marketplace,” Gottlieb told Fortune. And with interest rates being higher, it’s eating away at a lot of the cash flow, Gottlieb said, calling it a “very trying time.”

In his view, the difference with this office real estate downturn as compared to previous downturns is that office owners are wondering if demand will return at all.

“This time, people are questioning whether they’re going to need that space at all,” Gottlieb said.  “I believe they will be back. Things always evolve, things always change, but my experience has been that paradigm shifts move really quickly and then they come back closer to where it started.”

Gottlieb was the first to admit that what’s going on isn’t good for him or his industry, so it’s safe to say that he and his industry would benefit from people returning to the office. Either way, given where we’re at, if companies have the opportunity to save money, that is in terms of office space given they’ve shifted to a remote or hybrid work environment, they’ll take it. It’s all triggering a “reset in value,” as Gottlieb put it. But, Gottlieb said that property values, vacancy rates, and transactions are “all over the board,” with the so-called better buildings with better amenities mostly coming out on top. And for the most part, he said, companies do want office space, it just depends on how much space they want.

“We have challenges, like everybody else,” Gottlieb responded, after being asked if the firm has had to sell any of its buildings, or even turn in the keys, without giving a yes or no answer. But he did say that at the end of the day, the firm is one that lenders want to work with. 

“The world changed on all of us,” he said. “If [the lenders] want to take the keys back, they take it from me—what are they getting by giving it to the next guy?,” he asked, adding “once they foreclose, it’s worth even less, they don’t really have the capabilities typically to operate. And, there’s no liquidity in the market to sell, unless it’s rock, rock, rock bottom…so we’re finding that lenders are working with us and we’re working with them.”

Even so, Gottlieb said, Keystone was ahead of the game in refinancing. Still, in reevaluating its portfolio, the firm has gotten into the game of office to multifamily conversions. Gottlieb said it plays to their “core competency” over the years given they used to buy older, suburban offices and put a lot of money into them, not just a bandaid or some makeup, as he put it, to reposition them. Those older office buildings were typically in the best locations, but they needed capital, he said. Sometimes that meant putting new air conditioning systems in, or completely removing the facade and replacing that exterior with glass for natural light

“That’s where we started, and we morphed into this mixed use,” Gottlieb said. “We were never afraid to work within an existing building. And, you know, we’ve made plenty of mistakes along the way, but I chalked it up to experience. So converting a building from office to residential sounds more like a challenge than something to be scared of to us.” 

Instead of a complete conversion, Gottlieb said, they’ve made office buildings into mixed-used spaces. He gave the example of The Curtis building in downtown Philadelphia, which was just under a million square feet and has become a sort of landmark in the city as a former publishing house. Gottlieb said part of the office had unusual sizing, but it was the perfect depth for apartments. So they created a separate area and built apartments—that are now some of the highest priced apartments in Philadelphia, he said. Here’s the thing, that creates more supply, which is needed given the nation’s housing market is underbuilt, but it’s not affordable housing. 

“​​It’s hard to do affordable housing anywhere, anytime right now,” Gottlieb said, adding later that “every lever is kind of working against you.” 

The price of construction is up, the cost of borrowing is up, and the amount of money lenders are willing to lend is down, he said. And at the end of the day, in his view, investors want a return. That’s all to say that affordable housing doesn’t seem to be the number one thing on investors’ minds. 

In their own office to multifamily conversion process, Gottlieb said they start by looking at location, then they look at floor plates, which just refers to the leasable space on an entire floor of a building. “So if I have a building that I can design, and I’m only losing 10% or 20% of the space, that’s way better than a building that I’m losing 40% of the office rentable area,” he explained. 

But what seems to be Keystone’s secret weapon, if you will, is mixed use zoning. Downtown Philadelphia’s zoning code works for apartments, Gottlieb said, but the suburbs are sort of separated by uses—although there has been a push over the last several years to accept a mixed use environment. Zoning can sometimes be a deal breaker, given how much it can slow down the building process. Gottlieb said it can take one to two years sometimes just to get zoning approval before you even start development. 

“It’s not the slam dunk that everybody thinks it is,” he said. “It’s not that easy, most buildings don’t work.” 

Still, seeing that there’s hardly any liquidity in the market, you’d think that even securing a loan for these conversions would be difficult. “Everything’s a struggle today,” Gottlieb said. “And I think if we were just starting out, the answer would be we couldn’t get a loan for it.”

#Trouble #continues #mount #office #real #estate #sector #loan #todaytheres #liquidity #marketplace

TAGGED:ContinuesestateliquidityloanmarketplacemountofficerealsectortodaytheresTrouble
Share This Article
Facebook Twitter Pinterest Whatsapp Whatsapp LinkedIn Email Copy Link Print
Share
What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Previous Article 2023 NFL Over/Under win totals: Projected wins for each team, predictions 2023 NFL Over/Under win totals: Projected wins for each team, predictions
Next Article Businessman killed by his own cheese — RT World News Businessman killed by his own cheese — RT World News
- Advertisement -

Latest Post

Bitcoin SV investors attempt to resurrect 2019 Binance lawsuit
Bitcoin SV investors attempt to resurrect 2019 Binance lawsuit
Cryptocurrency
Why is Germany such a mess? — RT World News
Why is Germany such a mess? — RT World News
World News
Ex-UFC champ Conor McGregor touts Irish Bitcoin reserve in presidential bid
Ex-UFC champ Conor McGregor touts Irish Bitcoin reserve in presidential bid
Cryptocurrency
Pope Leo explains name: AI, worker rights
Pope Leo explains name: AI, worker rights
World News
Ethereum, Dogecoin, and Bitcoin Pepe
Ethereum, Dogecoin, and Bitcoin Pepe
Cryptocurrency
Taiwan eyes Bitcoin as hedge against inflation and US Treasury exposure
Taiwan eyes Bitcoin as hedge against inflation and US Treasury exposure
Cryptocurrency
- Advertisement -

You Might Also Like

Novo Nordisk sees double-digit FY growth; boosts Wegovy supplies to U.S
Business

Novo Nordisk sees double-digit FY growth; boosts Wegovy supplies to U.S

January 31, 2024
US Chicken Prices to Fall at Last Thanks to Green Fuel Boom
Business

US Chicken Prices to Fall at Last Thanks to Green Fuel Boom

January 29, 2024
Goldman Sachs raises Auto Trader shares target on robust FY24 results By Investing.com
Business

Goldman Sachs raises Auto Trader shares target on robust FY24 results By Investing.com

June 13, 2024
Why low completion rate among PhD candidates should worry the State
Business

Why low completion rate among PhD candidates should worry the State

August 4, 2023

About Us

NEWS JUNCTION (NewsJunction.xyz) Your trusted destination for global news. Stay informed with our timely and accurate reporting on diverse topics, including politics, technology, science, entertainment, sports, and more. Count on us for unbiased and reliable updates at your fingertips.

Quick Link

  • About
  • Disclaimer
  • Privacy Policy
  • Terms of Use
  • Contact

Top Categories

  • World News
  • Business
  • Technology
  • Entertainment
  • Cryptocurrency
  • Sports News
  • Trend
  • People

Subscribe

Subscribe to our newsletter to get our newest articles instantly!

    © 2023 News Junction.
    • Blog
    • Advertise
    • Contact
    Welcome Back!

    Sign in to your account

    Username or Email Address
    Password

    Lost your password?