Banks on Razor's Edge: NYC & Seattle's Real Estate Unravels Straining Financial System. 6 More Massive Projects Underwater.
It's Happening: Banks Can Not Handle This Kind of Stress: We are issuing a 5 Alarm Fire Warning. Get Your Money Out of The Banks and Buy Silver.
We begin in the Pacific Northwest which is considered the most beautiful and desirable area of the country by many.
Five years ago, we never thought we would see commercial real estate distress in the Seattle/Tacoma MSA, but this is the reality, and the mainstream media are quieter than crickets.
What was once the hottest real estate market in the US is now feeling the strain.
The Commercial Real Estate Crisis has spread beyond office buildings, where remote work was initially blamed. Now, we're witnessing the stress in the 'heads in beds' sector, specifically apartments and multi-family buildings.
We now must turn our attention to what was considered the #1 Commercial and Residential market in THE USA and Top 5 in the World … Manhattan
Manhattan Selling Off for Pennies on the Dollar
Prepare to be shocked. In a mere half-decade, a prominent midtown Manhattan office tower has experienced a staggering depreciation of $ 400M.
The appraised value of 1407 Broadway has plummeted from a robust $510M in 2019 to a mere $ 136 M, a drastic and swift decline.
Barclays extended a $350M loan in 2019. The owner, Shorenstein, is now grappling with a total defaulted or at-risk debt that is inching closer to a staggering $1 billion. This is a financial predicament that is hard to fathom, but it's a reality.
Midtown Manhattan: GroundZero 2.0
The Starting Bid: $8 per Square Foot, WTF?
This is absolutely shocking.
UBS is attempting to sell a Midtown Manhattan office building via an ONLINE AUCTION, signaling the excruciating challenges of commercial real estate in NYC.
The starting bid for the 920k SF building located at 135 W 50th St will be $7.5M, or $8 per SF
I see this gearing up to happen in our city, too. We’re still running on the dregs of the great pandemic population shift and stimmy boom, but signs of a coming bust are gathering. Of course nearly everyone denies it publicly, but privately, people are becoming worried.
The whole American economy is sliding into a disorganized hot mess of inflationary depression, IMO. Lots of developers and property investors are going to lose their shirts, and municipalities are going to lose a lot of tax revenue. This will mean that holders of muni bonds are either going to see the value of their bonds decline (as desperate cities offer higher interest rates to attract more outside investment), or they’ll simply lose their investments entirely as cities default.
The ripples will be wide. The consequences vast. Lots of wealth will change hands unexpectedly. Creative predators of failing single family homeowners have already started appearing with schemes to front run the collapse and those waiting to go bargain hunting in its aftermath. There will be, IMO, one grand, final feeding frenzy in which many who got fat and happy during the easy markets of the boom times, will see their gains evaporated and a new class of the wealthy and property owners appear, dominated by several large banks and hedge funds. Then the government will step in to “help” us little people with UBI, CBDC’s and other tools designed to manage the vast new slave population. And among those slaves will be many of today’s smug developers and property investors.
I blame the combo of economic intervention by the Fed, and the tax laws that override natural market forces and overly incentivize home building. But it WILL be sweet to see the many arrogant developers and investors finally get some comeuppance amidst the carnage they’re helping to create.
That is, if we survive the coming nuclear war….