Houston Office Leasing Down 29 Percent

Houston Office Market Leasing Down 29% in First Quarter https://t.co/LQXVdCkJlT

— Danielle DiMartino Booth (@DiMartinoBooth) April 4, 2023

Land Worth More Than the Building 

MANY buildings will quickly & objectively be assessed for the value of the land they’re on. It will be about “location, location, location.” https://t.co/V7dc5bHLRY

— Danielle DiMartino Booth (@DiMartinoBooth) April 5, 2023

Cracks in the Edifice

Hey @danjmcnamara

Has the storm passed for everything except Office?

If that’s the case, why the cracks in the edifice across sectors?

A wise man once said a great company does not make for a great investment. His legendary name escapes me… https://t.co/JcjyAd21Ft pic.twitter.com/LkTOLT7oYj

— Danielle DiMartino Booth (@DiMartinoBooth) April 5, 2023

Impending Crisis

@FabiusMercurius has been talking about this very topic: https://t.co/kQ3spMhuzI

— Adrian Morris (@Futur3_Th1nk3r) March 28, 2023

Lease Renewals 

With all this talk about CRE at least we know it won't be the black swan event. Lol. https://t.co/voXX5Tj2Pv

— Tracey Ryniec (@TraceyRyniec) April 4, 2023

“More than 50% of the $2.9T in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points"

Who's Holding the Bag?

hmmm ... who is holding the losses on the debt/equity related to this vacant real estate ... https://t.co/K8kSgpoX1t

— Richard Field (@tyillc) March 29, 2023

I discussed the answer in The Exceptionally Poor Timing of Small Bank vs Large Bank Cash Deployment

Here's the key picture.

Monthly average Commercial Real Estate percent allocation of bank assets 

Ripe for an Accident

Conditions look ripe for an accident in the short-term as this renewed risk in CMBS pulls forward the increased cost of borrowed money and decreased bank profits/lending. https://t.co/9SHjM5OQvZ

— Samantha LaDuc (@SamanthaLaDuc) March 28, 2023

And small banks do not have the deposit cushion of larger banks.

It would not take much for small banks to blow through that minimal cushion. 

What will the Fed and FDIC do if there is a CRE-inspired run on smaller banks? 

Guarantee everything? 

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