The CRE implosion is picking up steam. Check out the grim stats on Pittsburgh. Unions are also a problem in Pittsburg as they are in Illinois and California.
Downtown Pittsburgh Implosion
The Post Gazette reports nearly half of Downtown Pittsburgh office space could be empty in 4 years.
Confidential real estate information obtained by the Pittsburgh Post-Gazette estimates that 17 buildings are in “significant distress” and another nine are in “pending distress,” meaning they are either approaching foreclosure or at risk of foreclosure. Those properties represent 63% of the Downtown office stock and account for $30.5 million in real estate taxes, according to the data.
It also calculates the current office vacancy rate at 27% when subleases are factored in — one of the highest in the country.
And with an additional three million square feet of unoccupied leased space becoming available over the next five years, the vacancy rate could soar to 46% by 2028, based on the data.
Property assessments on 10 buildings, including U.S. Steel Tower, PPG Place, and the Tower at PNC Plaza, have been slashed by $364.4 million for the 2023 tax year, as high vacancies drive down their income.
Another factor has been the steep drop — to 63.5% from 87.5% — in the common level ratio, the number used to compute taxable value in county assessment appeal hearings.
The assessment cuts have the potential to cost the city, the county, and the Pittsburgh schools nearly $8.4 million in tax refunds for that year alone. Downtown represents nearly 25% of the city’s overall tax base.
In response Pittsburgh City Councilman Bobby Wilson wants to remove a $250,000 limit on the amount of tax relief available to a building owner or developer as long as a project creates at least 50 full-time equivalent jobs.
It’s unclear if the proposal will be enough. Annual interest costs to borrow $1 million have soared from $32,500 at the start of the pandemic in 2020 to $85,000 on March 1. Local construction costs have increased by about 30% since 2019.
But the city is doomed if it does nothing. Aaron Stauber, president of Rugby Realty said it will probably empty out Gulf Tower and mothball it once all existing leases expire.
“It’s cheaper to just shut the lights off,” he said. “At some point, we would move on to greener pastures.”
Where’s There’s Smoke There’s Unions
In addition to the commercial real estate woes, the city is also wrestling with union contracts.
Please consider Sounding the alarm: Pittsburgh Controller’s letter should kick off fiscal soul-searching
It’s only March, and Pittsburgh’s 2024 house-of-cards operating budget is already falling down. That’s the clear implication of a letter sent by new City Controller Rachael Heisler to Mayor Ed Gainey and members of City Council on Wednesday afternoon.
The letter is a rare and welcome expression of urgency in a city government that has fallen in complacency — and is close to falling into fiscal disaster.
The approaching crisis was thrown into sharp relief this week, when City Council approved amendments to the operating budget accounting for a pricey new contract with the firefighters union. The Post-Gazette Editorial Board had predicted that this contract — plus two others yet to be announced and approved — would demonstrate the dishonesty of Mayor Ed Gainey’s budget, and that’s exactly what’s happening: The new contract is adding $11 million to the administration’s artificially low 5-year spending projections, bringing expected 2028 reserves to just barely the legal limit.
But there’s still two big contracts to go, with the EMS union and the Pittsburgh Joint Collective Bargaining Committee, which covers Public Works workers. Worse, there are tens — possibly hundreds — of millions in unrealistic revenues still on the books. On this, Ms. Heisler’s letter only scratched the surface.
Similarly, as we have observed, the budget’s real estate tax revenue projections are radically inconsistent with reality. Due to high vacancies and a sharp reduction in the common level ratio, a significant drop in revenues was predictable — but not reflected in the budget. Ms. Heisler’s estimate of a 20% drop in revenues from Downtown property, or $5.3 million a year, may even be optimistic: Other estimates peg the loss at twice that, or more.
Left unmentioned in the letter are massive property tax refunds the city will owe, as well as fanciful projections of interest income that are inconsistent with the dwindling reserves, and drawing-down of federal COVID relief funds, predicted in the budget itself. That’s another unrealistic $80 million over five years.
Pittsburgh exited Act 47 state oversight after nearly 15 years on Feb. 12, 2018, with a clean bill of fiscal health.
It has already ruined that bill of health.
Act 47 in Pittsburgh
Flashback February 21, 2018: Act 47 in Pittsburgh: What Was Accomplished?
Pittsburgh’s tax structure was a much-complained-about topic leading up to the Act 47 declaration. The year following Pittsburgh’s designation as financially distressed under Act 47 it levied taxes on real estate, real estate transfers, parking, earned income, business gross receipts (business privilege and mercantile), occupational privilege and amusements. The General Assembly enacted tax reforms in 2004 giving the city authority to levy a payroll preparation tax in exchange for the immediate elimination of the mercantile tax and the phase out of the business privilege tax. The tax reforms increased the amount of the occupational privilege tax from $10 to $52 (this is today known as the local services tax and all municipalities outside of Philadelphia levy it and could raise it thanks to the change for Pittsburgh).
The coordinators recommended an increase in the deed transfer tax, which occurred in late 2004 (it was just increased again by City Council) and in the real estate tax, which increased in 2015.
Legacy costs, principally debt and underfunded pensions, were the primary focus of the 2009 amended recovery plan. The city’s pension funded ratio has increased significantly from where it stood a decade ago, rising from the mid-30 percent range to over 60 percent at last measurement.
The obvious question? Will the city stick to the steps taken to improve financially and avoid slipping back into distressed status? If Pittsburgh once stood “on the precipice of full-blown crisis,” as described in the first recovery plan, hopefully it won’t return to that position.
The Obvious Question
I could have answered the 2018 obvious question with the obvious answer. Hell no.
No matter how much you raise taxes, it will never be enough because public unions will suck every penny and want more.
On top of union graft, and insanely woke policies in California, we have an additional huge problem.
Hybrid Work Leaves Offices Empty and Building Owners Reeling
Hybrid work has put office building owners in a bind and could pose a risk to banks. Landlords are now confronting the fact that some of their office buildings have become obsolete, if not worthless.
Meanwhile, in Illinois …
Chicago Teachers’ Union Seeks $50 Billion Despite $700 Million City Deficit
Please note the Chicago Teachers’ Union Seeks $50 Billion Despite $700 Million City Deficit
The CTU wants to raise taxes across the board, especially targeting real estate.
My suggestion, get the hell out.
[…] Pitt is shit […]
These comments are more entertaining than TV. Everyones very personal opinion is THE end all be all truth. Lol
As is yours???
Mish 2024. “I could have answered the 2018 obvious question with the obvious answer. Hell no.”
I like Mish because he has known about this relentless destruction of Major Cities since 2018. I learned it boarding up my employer’s retail outlets, in Detroit, in 1980.
What has the rest of the world learned since then. Nothing! Is there anyone out there that is supposed to warn people about impending disasters caused by Government malfeasance. Yes! The Constitution says it in the 1st Amendment, “or of the press” which the press thinks makes them immune to prosecution for not doing their job. So, are they going to start doing their job as whistle blowers? No. Rather they are protecting the politicians that have caused and/or ignored these problems. So, eat, drink and be merry for tomorrow we crash.
Great point! It used to be the MSM who fished out stories like this. Now they are paid to ignore it.
These are all the unintended consequences of the COVID Plandemic used to remove President Trump from office and usher in a more WEF/DC/UN friendly US government. Now the world is a crisis of chaos and crime, and the elites are waking up to the fact that they are about to lose Bigly from electric cars to commercial real estate. We witnessed all of the FA, now we get to watch what happens as the FO!
Pittsburgh’s CRE problems are not caused by unions. Unions built many of those bldgs. and those bldgs. thrived up until the Democrats that run many urban areas decided that our new system of govt during covid was going to be Germaphobia (and tyranny)
Unions werent the main driving force behind the mvmt to delegitimize the police in many cities and make them ineffective causing crime and disorder to rise significantly and making cities places to avoid.
The landlords of these bldgs. would invest in converting some of them to residential housing but the problem is the crime and disorder are causing ppl and $$$ to flee democrat states and cities.
the author wasn’t directly linking CRE w/ unions.
the author was simply addressing BOTH sides of the city’s fiscal coin: revenue & expenditures.
crashing CRE = crashing tax REVENUE
new (wildly over-generous) city union contracts = skyrocketing public EXPENDITURE
a blind man can see how the two are terminally RELATED (but not causally related).
FFS, wake up.
Govt unions didn’t craft the Covid response or the BLM riots that are currently wrecking many cities.
Democrat politicians did that.
Take out those 2 events and office space wouldn’t be imploding
He was talking about government unions, not construction unions. Obviously two different things.
Definitely! Construction workers might be out of work for months on end due to our slow economy. But government unions—even without work—never stop getting raises, etc. The left is already talking again about raising retirement rates for SS recipients to 69 (they tried it once before but had to settle for an increase to age 67). Yet in all those years, government unions were never required to raise THEIR retirement age. So the rest of us work ever longer to support those who don’t have to. It’s slavery, pure and simple!
Easy to blame things on unions. That isn’t the crux of the problem. We are at the end of a great cycle. Empires always collapse and this one will be no different. There will be a lot of pain. We are on the precipice of another unexpected turn of events come 2025.
I am not opposed to unions, per se; I am opposed to public-employee unions.
Same!
It’s easy to blame government unions precisely because they are a major source of distress on city budgets. They 100% deserve blame.
Commercial real estate doesn’t seem big enough to matter to the country.
Looking at the state or even metro area level, the issues are pretty manageable.
It seems like an issue that only matters to dense urban cores and the institutions that directly rely on taxes from those dense urban cores.
Even within that category, not all urban cores appear to be suffering. Areas with a mix of work, shopping, living, and entertainment seem alright.
This crisis might only really play out in cities that were so unpleasant before the pandemic that they were only used for workspace. Diversified, attractive cities will take a hit and keep growing.
Pretty thought, but when the big (demoncrat) cities fall, so fall the rest of us who work there.
It takes years for cancer cells to multiply to a size large enough for MRI to discover it.
Then it’s too late. The cancer in Googl, Amazon, AAPL and other high tech co in NYC and Bay area is so large mgt cannot stop it. The high tech are rotting from within. Muslims and antisemitic gen z workers scorn Jewish and Israeli workers. “Blood in your hands. Free Palestine. Jasa is starving” all over the place. They don’t speak with each other. They yell at each other, shaming, showing passion and anger. Hate and antisemitism came to the surface. Sinwar salivate. He was waiting for Jasa to suffer and starve in order for US and European leaders to stop Bibi. He will rise from the ashes to expel all Jews from the ME. The rift between Biden and Bibi is so wide it invites Hezbollah and Iran to take action.
While PGH downtown is dying, Oakland and the Shadyside are flourishing. CMU and
University of PA students will make 100K/150K when they grad. Across the Monongahela river the high tech and biotech ctr are expanding. PGH competes with Stanford and silicon valley. PGH is the epicenter of robotic and self-driving machines, including military machines. Old people are moving south. The zoomers are taking over. Many German co invest abd expand in the area. It’s the largest German area in the US.They liked PGH before and the like PGH even better now for the talents and brains. China likes this area even better. CMU is China !!
The DOD loves PGH. They can’t trust the radicals in SF,
NONSENSE.
Pgh (including Oakland/Shadyside) continues to SHRINK – population shrinking, investment/development shrinking, tax revenue shrinking.
Zoomers aren’t taking over anything… they come to Pgh for school, get their diploma & then they LEAVE… because THERE ARE NO JOBS (for advanced degrees) in Pgh.
a dozen “robotics” jobs do NOTHING for the city of Pgh. NOTHING. just a drop in a massive empty bucket.
Pgh should be RE-INDUSTRIALIZING – taking advantage of the ocean of cheap & clean natural gas energy that the entire region is built upon.
Pgh needs new, RATIONAL leadership, period.
PA also needs new leadership – workers’ comp. laws need to be radically reformed & PA must become a right-to-work state – a vital change that is about 50 years overdue.
outdated workers comp. rules/costs + closed-shop/union rules/status are KILLING the boomer-dominated midwestern states.
Ohio & Tennessee have rational economic formula(s) in-place, and those states are BOOMING.
PA, MI, etc. are still stuck in 1970, and these states are DYING.
Totally agree!! TN can’t even keep up with housing for all the new relocators!
The municipal government district named the City of Pittsburgh is just the urban core of about a third of a million people. The total number of residents of the seven counties around the city used as the ‘Pittsburgh area’ by the Census Bureau is about two million. The model of urban development and decay in the US resembles the Petri dishes that we all used in high school biology classes, where a mold or bacteria was placed in the middle and it slowly consumed all of the nutrients in an ever-expanding ring until it hit the outer limit of the dish. The only actual growth is at the edge of the ring, the middle of the ring dies because there’s nothing left to consume.
There’s still growth and new construction in a ring around Pittsburgh, but it’s mostly in the zone in a concentric ring between about five miles and ten miles from the Point where the Ohio River begins. I live about ten miles from the Point. Inside the zone is the City, which is corrupt as Hell and dying. I have a co-worker who works his main job for the City, in support for the fire department, and has a boss who is so corrupt that he submitted fake paperwork claiming that he was working overtime when he was actually out on medical leave. He accidentally sent a copy of his records by e-mail to my co-worker, which revealed the lie. He’s ‘connected’, so he gets away with it. There’s no oversight, the salaried workers for the City don’t punch in and out of work and have time cards like most ‘real jobs’ have for non-salaried workers.
My co-worker remarked that when he took his second job, as an hourly blue collar worker, that it was the first time that he had to punch in and out in two decades, as the City works on the ‘honor’ system for salaried employees. Meanwhile, my immediate boss, out here in the real world, is salaried and regularly has to work massive unpaid overtime just to keep his job. He worked a 2 p.m. to 5 a.m shift last week, and was only paid for his eight hours of ‘official’ work time. If he doesn’t mind the store, he’ll be fired, so he is forced to work unpaid overtime.
Keep all of this in mind when you read the official stats about ’employment’. The government jobs are faked to increase the hours actually worked. The salaried guys in the private sector often work up to thirty hours more per week than they get paid for according to the official records, just to keep their jobs, so their records are faked in the opposite direction, to decrease the hours actually worked.
The same pattern shows up in voting records, There were precincts in the inner city where Trump officially received zero votes in the last election. Meanwhile, out here in the suburbs, he had around 70-75% support. A ten mile drive takes you from deep blue to deep red in the political spectrum in Western PA.
“ten mile drive”
it’s a one or two mile drive… Pgh city limits are TINY – just cross a river & you’re into suburban municipalities.
unfortunately, allegheny county is following the city/Pgh down the road of idiotic/failed/suicidal policies.
I once saw an article liken cities to a hive of bees, busy making honey. And a less-fitting-analogy of city government as bears intent on taking honey for themselves.
I wonder if there is a Marxist, or Tytler, inevitable law of history that cities get built to make money for the people living there, followed ‘soon’ by envy-mongering people intent on taking from the makers, leading eventually to ruination of whatever value there was in making things there.
Add – ?Why the big office clump in the city’s downtown, with a big rush hour in the morning into the city, and a big rush hour at supper time out of the central city?
Aren’t 15 minute walkable cities, where everything is spread out more evenly, better?
No. Because most people don’t want to live where they work. They want to be able to mentally separate from their work lives.
If they gave an office building away for free then who would buy it and pay the taxes? Cities are obsolete crime ridden cesspools. The problem is city government parasites. The solution is ethical government. You find ethical government in many suburbs. Under what conditions would an ethical suburb adopt and administer a section of a corrupt city? Dissolve the city government, prohibit unions, eliminate the minimum wage, end all state funded welfare, and the tax base my cover the cost of a cleanup.
you got it right.
Pgh city gov’t should have merged w/ allegheny county govt. DECADES ago.
– And with an additional three million square feet (DET) of unoccupied leased space becoming available over the next five years, the vacancy rate could soar to 46% by 2028, based on the data.
> So I guess the old “Build it they will come” theory, has been finally tossed out the window. There is an awful lot of this going around, it’s occurring everywhere and it’s nothing new, but it is getting worse and worse.
Chicago is and has been, a total financial wreck of a city for decades now. The south keeps going down and the north just slowly follows it. They have had Zero Political support that entire time, but the same destructive forces keep on getting elected back into Power. Schools are crap, and crime is a way of life for many.
NYC is simply brain dead at this point, as they have failed in nearly everything you could possibly fail at, as a major city. Just the basics were enough to take them down. Starting with sanctuary status, and no money or manpower to support such an endeavor. Running out a vast number of major tax contributing Companies, did wonders for jobs, CRE whoas, humanitarian efforts, Hospital and school overcrowding issues, to name just a few. As NY clearly shows how a Major City in America Today, can self destruct nearly overnight.
Let’s face it, nearly all major cities in America, are basically in trouble at this point…
Wait until these Cities start feeling the pinch, of staying broke to keep the Unions happy and solvent. That’s going to be interesting to watch. Of course follows the breakdown of the Public Schools (Unions), Public Pensions (Unions), Public Jobs tied into Government (NGO’s), and part of the Government Structure at this point.
Banks to come, Residential RE to come, Foreclosures to come, Stock Market, 401K’s, Repossessions and on and on are all going to get cleaned out in some capacity. What can’t be paid for won’t be, and the chips will fall where they may, and in most cases where they should…
Real estate agents always say “location, location, location”.
These are the prime area and very expensive. How can it go negative?
If it goes it will be a short period of time.
It will be transformed and full in a few years time.
Look at real estate market in GFC. A lot of properties go underwater and
then positive in a short period of time.
– Real estate agents always say “location, location, location”
> While that may be true in good times, it’s actually Int Rates, Int Rates, Int Rates. Ask anyone still in the industry, and they will tell you this.
– These are the prime area and very expensive. How can it go negative?
> They are the first to go south. People with money, typically know how to invest, and what to invest in. Housing is a fools errand at this place in time. Way overpriced, hard to sell once you buy, so you better be able to keep up the payments. Oh and the job market is toast, so you better stay employed at that high paying job, because those are disappearing fast too.
– A lot of properties go underwater and then positive in a short period of time.
> Um, this is 2024. This hasn’t happened in a long, long time. Prices keep going down, and not up. As more get built, prices will drop further to sell them. Think of it like food. The shelf life is based on price however. The move quick or get reduced, as the market is at a complete stand still across the Country as a whole…
“Half of Downtown Pittsburgh Office Space Could Be Empty in 4 Years”
That sounds like a Great Depression level event. The Pittsburgh police department has also been more than cut in half, apparently due to a defund the police policy. 13,000 down to 6,700. Apparently, graveyard shift is short handed.
“Act 47 in Pittsburgh”
Act 47 of a 3 act play?
“Hybrid Work Leaves Offices Empty and Building Owners Reeling”
To top it off, Bernie Sanders wants a 4 day work week, with 5 days worth of pay.
OMG! Get rid of Sanders already. He is just too stupid.
AI doesn’t need an office to work out of. Who cares if George Washington is black and its a complex issue to decide if Adolph Hitler was actually worse than Orange Man Bad. Profit margins baby, profit margins. And then, free energy when we are all batteries …
The liberals yammer in favor of converting the office towers to residences, not stopping to think about how much that will cost. Plumbing, electrical, ventilation come to mind immediately, but there will be much, much more. Oh, but not to worry. Arithmetic is racist. LOL
And they forget: without office work nearby, why would anyone live there?
This is all about remote work. Future complaints from remote workers are baked in the cake.
Most problems fall into three categories, not mutually exclusive yet separately analyzable: random “acts of God,” the chronic (alcoholism, health as examples), the entirely predictable. The list above is as predictable as it gets.
Might as well prepare now for future whining.
Must not have dogs at home? No anti-depressant box wine suburban cul-de-sac virtue-signaling lawn sign office Karen busybody here.
Not sure what “woke” has to do with it. The bubble has popped. Higher interest rates have seen to that. Coming soon to a city and town near you.
Unions are horrible, and yet inequality between the top 10% incomes and the rest of us keeps growing? Could you explain that?
There’s a fundamental difference between unions among workers in private and corporate industry and unions among employees of government agencies or bodies. The former are historically a remedy to the misdistribution of income as you raised in your comment, but the latter should not be allowed to exist. They only further degrade the governmental agencies that are already inherently inefficient because of their monopolistic powers.
Did you catch the last few seconds of that 60 Minutes clip on the CRE office crybabies? “..,sponsored by Pfizer.”
Yes, yes it was.
I’ve increasingly seen random Pfizer ads promoting an anti-cancer “vaccine” with their marvelous mRNA technology. Pfizer is one pharma company that makes money killing it’s patients.
I’m from Western PA, grew up in Armstrong county (dairy farms, coal mines, and Amish) which is about 90 minutes north east of Pittsburgh. The city and the entire western half of PA have been slowly dying for decades. If half of Pittsburgh’s CRE empties that will be the final nail in the coffin in my view.
I left the area 20 years ago as did most of my former classmates. It’s a beautiful area, but there’s just nothing there in terms of jobs. My former high school was demolished a few years after I graduated (my graduating class had a total of 37 kids). The remaining few students were consolidated with two other low enrollment schools in the area. Enrollment in the newly built school continues to dwindle. Teachers there get paid ridiculous salaries when you consider the median household income (i.e. the tax base). Propety taxes are high when compared to home values. The population is aging heavily. Drugs are a huge problem just like they are in most dying areas.
Retirement income isn’t taxed in PA so that’s a plus I guess.
It’s the same story all over the rust belt. Nothing lasts forever I guess.
I lived in southern PA for a couple years. By far the strangest place I ever lived and I lived in many states. The mayor was using tax dollars to buy wild west relics and opened a museum. You could only buy beer from a “state” store meaning nepotism on steroids. The stores would charge you more for cold beer. Insane. Eventually you could buy it in box grocery stores but only beer. You had to re-enter the store to buy groceries.
I have many bizarre stories from PA. The state is the apex of corruption and nepotism. I use to think it was Louisiana but PA hands down. My favorite is we were trying to clear roads of trees after Sandy. I was in the Guard at the time. State workers would not allow us. They said their union over-rided the National Guard and we could not help. Roads stayed blocked for days on end. We could have cleared it in hours. My Commander just shook his head. PA is a s***hole state. Rock song about southern PA:
link to youtube.com
Woodsie Guy, what you’re describing is “rural flight” a fascinating social phenomenon that began after WW2. And it continues throughout areas today that were originally founded as farming country. Anyhow, research it if you’re interested, especially maps of states that delineate counties (demographics over time). Fascinating stuff.
When a new landlord gives up on renting vacant spaces the “For Rent” sign is gone. All the tenants are forced to move to the first five floors, packed like sardines. The rest are vacant. The building became a zombie building. Visitors cannot enter the higher floors, from floor six all the way to the penthouse. The first five floors are well protected with security guards and cameras. The new landlord will not invest a dime, unless there will be a systemic change. Downtown PGH died after Kaufmann’s, Macy’s, Gimbles, Montgomery ward and Hills closed their doors.
Yes downtown centers across the U.S. have real estate challenges. And at the other end of the spectrum, there is a massive farming crisis happening that no one talks about.
link to newsweek.com
“The United States lost 141,733 farms over the course of five years, in part due to a broken workforce system that has led to a worker shortage. But a report with 15 recommendations unanimously agreed upon by a bipartisan group of lawmakers aims to address that shortage, and it has immigration laws in its sights.”
Some of you aren’t going to like the solution but it’s foreshadowed in that last sentence…lol.
Got food stocks? Saw that ZH’ers want to boycott Tyson, please do, i want to load up more on TSN at cheaper prices. Choo! Choo!
Land prices are the overarching issue. There has been ample supply of cheap labor coming across the US/Mexico Border over the past 5 year to more than cover the “worker shortage” for particular crops.
Talking about the number of farms lost nationally it isn’t an issue of lacking workers for row crops. Consolidation (like in any other busininess) leads to larger operations and the small ones have greater difficulty operating/competing when one considers the expenses like machinery and seed. Add in some tycoons and entities like retirement funds ‘investing’ in farmland and you don’t see many with the resources and gumption to start a farm these days, .
link to nytimes.com
“What is happening in South Dakota is playing out in farming communities across the nation as the value of farmland soars, hitting record highs this year and often pricing out small or beginning farmers.”
start a farm these days
Ha, ha, ha, that’s rich
start a farm
you must be kidding me
start a farm
well maybe an ant farm for the little kids.
Apparently having a second link leads to moderation and editing the comment doesn’t pull it out of the queue. I’ll try with just one in the meantime and let you know that workers isn’t the overarching issue in farm closures, it is the price of land!
link to marketwatch.com“Billionaires like Jeff Bezos are big on owning farmland. Here are some ways average investors can play this sought-after commodity.”
I am a bit confused by this paragraph:
Aren’t real estate taxes simply a fixed pie, and various entities only have shifting valuations, but the end result is the same total amount of revenue? This is how it is done in Illinois, but am unsure if this is different in Pittsburgh?
I have seen this said erroneously by “journalists” in the past, as they usually don’t understand the nuance of these things.
If the value of a property is reduced by 50%, wouldn’t you expect the associated taxes to decrease in kind? The issue here is that it isn’t isolated properties being significantly devalued but the entirety of the city’s commercial portfolio. Where they exist, residential property taxes tend to work similarly.
If it’s done the way you state in IL, then that will certainly result in a quicker decline of commercial real estate values.
The Unions carry the BIG BOULDER of Lobby Money, over-riding common sense.
DO THE “PEOPLE” NEED A UNION? Supposedly, our votes are our UNION CONTRACT with America, but then we are left with voting for SCUM.
Enjoying watching these mongrels burn their cities down.
Time to go long in WeWork? (sarc)
we can convert all these offices to settlements to Arabs and illegals and bring in wonderful growth.
Downtown Seattle is full of empty towers.
My friend has a whole floor in a prominent building. His landlord says, “just pay what you can – don’t leave.” He paid nothing for almost a 1.5 years. Some floors appear to be vacant.
The elephant in the room are borrowing cost for risk money (construction loans). I was a Ca. developer in 1990 – the faucet was turned off almost over night. It wasn’t just the interest costs – even with an impeccable history – the funding dried up literally into NOTHING. Huge projects dead mid launch.
This kills the construction industry and all the jobs it creates.
Once these commercial loans start collapsing in earnest – housing should follow. Boomers trading homes amongst themselves is a non starter and no one will be able to come in on the bottom at massively inflated valuations and massive interest costs relative (to the interest rates – (that allowed values to boom.) Once this reality sets in the boomers will pile on to sell – this excess inventory at inflated ponzi prices and no buyers will implode values just like in 09/10.
Obviously banks will be holding the cards yet again.
Castles Made Of Sand
Fall Into The Sea
Eventually
I dig the Hendrix.
damn I’m old but still want to be cop there. I can live in the towers cheap
We can only hope. Deflation is coming in a big way.
Doom loop…
Banks don’t hold the mortgages. They stopped doing that after 2008 or rather the remaining ones stopped doing that after 2008.
Most of the mortgages are either held by the government entity known as Phoney and Fraudy or are in MBS’s held in 401Ks/Pension funds.