A report from Fortune Magazine. "Floor-to-ceiling, the interior of Tattooed Mom is covered in graffiti. The bar, which has been open for 23 years on South Street in Philadelphia, doesn’t stop its hipster patrons from getting crafty. But Tattooed Mom has problems that can’t be painted over. It’s unprofitable, and sales remain down 70% from pre-pandemic levels. Robert Perry says his bar will survive, but many of its neighbors won’t. 'Within a one-block radius there are six restaurants that are already gone,”' he says. 'Every week you read about new closures, and it breaks my heart.'"

"Some buttoned-down bankers could soon share his pain. As the pandemic wears down bars, gyms, hotels, and other businesses, it runs the risk of causing a commercial real estate (CRE) tenant crisis, which could put billions of dollars’ worth of loans in jeopardy. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, tells Fortune that CRE is the most vulnerable financial sector—with the potential to cause a shock to the system. 'Thousands of small businesses have already or will go under … That rolls up into the commercial real estate market and rolls up into the banking sector,' Kashkari says."

From Bisnow New York. "Much like the rest of its economy, the construction labor force in New York City has been hit harder than the rest of the country over the past year. The city faces a slower recovery and some of the jobs it has lost may never return, presenting challenges for an industry that was already facing labor concerns before the coronavirus pandemic. The decline in new starts not only propelled a wave of recent layoffs starting in December but also pushed down the cost of labor, United Service Workers Union Construction Division Director Kevin Barry told Bisnow."

"Many construction companies are barely turning a profit on any of their projects, but bid at the low price to buy themselves some time and keep their workers employed, Barry said. 'Prices are in the toilet,' he said."

The Houston Chronicle in Texas. "Camden Property Trust’s annual earnings report reflected a number of setbacks the Houston apartment market has suffered in the past year. Camden’s 2020 net income fell 43 percent to $124 million from $220 million the year before as a result of increased maintenance costs and taxes and a drop of income from deferred compensation plans and property sales. Adjusting the lease of a retail tenant who has not been able to pay rent will likely cost Camden $3.5 million in rent from a retailer."

"For the the quarter ended Dec. 31, the Houston-based multifamily real estate investment trust reported net income of $29.1 million, down sharply from $95 million in the year-earlier period. The Houston market saw some of Camden's biggest hardships in 2020, with net operating income falling 8.3 percent from the year before. The apartment developer and operator blamed the energy slump and a high number of newly built units on the market's performance and said it planned to sell off Houston assets in the second half in the year."

"'We had 20,000 apartments delivered last year, and we’re in the process of delivering another 20,000 apartments this year,' Keith Oden, executive vice chairman of Camden’s board, said in a Friday earnings call. The influx of apartments came as the oil industry was struggling with profitability. Then COVID hit. Oden estimated 40,000 apartments would require a net increase of 200,000 Houston-area jobs to provide the population growth needed to fill them."

"'And that just hasn’t happened,' he said. 'It’s just as simple as that. We’ve got way too much supply. It’s hand-to-hand combat on the stuff that’s either downtown or close-in assets, which makes up a decent part of Camden’s portfolio.'"

"Only 0.4 percent of Camden residents in Houston have fallen behind on rent, compared to 6.4 percent in California. Campo blamed the high delinquencies in its California properties on politics. 'Both the state and local governments have just put it into the brains of folks there that they just don’t have to pay,' he said. 'And all of the various legislation and moratoriums and what have you, you just have a group of people that look at it like getting a free loan from Camden. Ultimately, they’ll have to pay or their credit will be destroyed, and it will be interesting to see how that all plays out and how the government responds to that moving forward.'"

The Turlock Journal in California. "In Turlock, Reliable Property Management owner Becky Arellano said she’s seen a 'trickle down effect' as tenants are unable to afford their monthly rent and landlords subsequently struggle with the mortgage. 'It’s been tough for both sides — the property owners and the tenants,' Arellano said. 'While we are compassionate about people not being able to pay their rent because they don’t have a job or whatever the circumstances are, there are still mortgages on these properties.'"

"When the moratorium is eventually lifted, she expects some homes to go into foreclosure as a result of unpaid back rent despite mortgage companies working with property owners as well. 'I would encourage people to call their property management or landlord and try to work something out,' Arellano said. 'People need to reach out to their landlords and their mortgage companies and see what they have to offer so they're not facing that foreclosure when this ends.'"

The Bay Area Newsgroup in California. "After years of soaring Bay Area rents, the economic slowdown and remote work mandates could bring deep cuts to higher-end apartment prices for years to come. Rents may fall in the Bay Area for at least one or two more years, according to analysts from the real estate data firm Yardi Matrix. A return to pre-pandemic prices in multi-family buildings — typically newer high rises or sprawling suburban apartment communities — could be five years or more away, analysts say."

"Bay Area rents have plummeted throughout the coronavirus pandemic, dropping as much as 30 percent in cities with a high concentration of tech companies, according to Zumper. Since January 2020, the median two-bedroom rent in San Jose has fallen 10 percent to $2,660, dropped 17 percent in Oakland to $2,530, and cratered 23 percent in San Francisco to $3,500."

"Rents for two-bedroom apartments in Peninsula cities have also seen dramatic declines: Santa Clara and Cupertino both dropped 12 percent to $2,730, Mountain View fell 28 percent to $3,050, and Menlo Park sank 26 percent to $3,000."

"Managers of multi-family buildings are offering weeks or months of free rent to attract tenants as demand drops. Zumper is seeing listings with between two weeks and three months of rent concessions. In San Jose, roughly 4 in 10 high-end apartments offered free rents in December, by far the highest percentage in the country, with an average discount of $3,500, according to Yardi Matrix. About 1 in 5 San Francisco high-rises advertised discounts, with an average savings of $3,600."

"Yardi Matrix analysts found other big concessions in New York City and throughout cities in Texas, including Austin, San Antonio, Dallas and Houston. Bay Area and Sacramento apartment prices, among the highest in the nation, have dropped nearly 9 percent from last January, according to Yardi Matrix. The state estimates California tenants owe at least $400 million in back rent."

From Bisnow on Georgia. "Another major Metro Atlanta mall has gone back to its lender. Two CMBS loans attached to Simon Property Group's Town Center at Cobb mall were foreclosed on and returned to lender Deutsche Bank this week, the Cobb Business Journal reported. There were no bids at an auction Tuesday on the 560K SF retail portion of the 1.2M SF regional mall that was the subject of the distressed loans, the Journal reported."

"'It's unfortunate that a mall that size, with that kind of tax base and everything, would be foreclosed on,' Cobb County Commissioner JoAnn Birrell told the Journal. 'There could be developers or companies that may look at purchasing it, but with things the way they are — the pandemic, so many businesses closing because of COVID — it’s not a good time.'"

"The loan for the mall was split across two separate CMBS deals with one valued at $116.8M and another at $62.6M, according to CMBS research firm Trepp. The value of the mall covered under the loans dropped from $322M in 2012 to $130.4M at the time of foreclosure."

"Simon owns six other malls and shopping centers in Georgia, including Lenox Square and Phipps Plaza, both in Buckhead. This is not the first large mall owned by a publicly traded retail giant to head back to its lender this year. In January, Brookfield Property Partners transferred the deed to the 1.3M SF North Point Mall in Alpharetta back to its lender, New York Life Insurance Co. Known as a deed-in-lieu-of-foreclosure, Brookfield's loan was valued at a little over $200M at the time of its transfer."