A weekend topic starting with WCPO in Ohio. "One of downtown’s largest office properties is seeking $45 million in tax breaks to help it convert part of its space into 205 apartments. Owners of the Atrium One and Atrium Two buildings say they’re hoping to avoid 'a catastrophic loss of office tenancy in the coming years.' Acabay Inc., a Vermont-based real estate company that bought the Atrium properties in 2018 and 2019, shared details of its proposed $80 million renovation in an application for financial assistance with the city of Cincinnati. Two companies that track mortgage-backed securities say Greater Cincinnati’s delinquency rate for office loans is approaching 20%."

"'My impression is that over the short term it’s definitely going to be a little painful,' said Michael Rosenbaum, general manager for Diversified Management. 'People who don’t have the reserves … will be defaulting.'"

The Real Deal. "The Sphere in Las Vegas has taken off. But the nearby 68-acre business park owned by Blackstone has done a belly flop and now sinks toward default. Once dubbed 'Nevada’s business district,' the 1.4 million-square-foot Hughes Center is nearly half empty and has gone into special servicing, the Las Vegas Review-Journal reported. Last spring, New York-based Blackstone stopped making payments on a $325 million loan tied to the office park and went into special servicing. 'We began writing this property down three years ago and completely wrote it off earlier this year,' Blackstone said in a statement often repeated after questions about any of its troubled office properties."

Bisnow on Texas. "It was a year of reckoning for the local apartment industry. After notching a series of wins in the wake of the pandemic, occupancy in Dallas-Fort Worth declined each month in 2023, causing rent growth to falter in the back half of the year. A wave of new units coming online snatched the ball from owners and placed it firmly in the tenants' court, marking a reversal in the power dynamic that has defined the market for the last three years. 'There’s just been wild swings in supply and demand,' MRI ApartmentData Industry Principal Bruce McClenny said. 'That’s what’s behind the drop-off in [rental] rates — there are so many new units coming on, and the timing isn’t right.'"

"More than 8,100 new units opened in DFW in the third quarter alone, and another 44,000 are on the way in 2024 and 2025. Meanwhile, more than 81,000 existing units sit empty, and landlords are having to work twice as hard to fill them amid fiercer competition from new development. 'When you’re talking about so many thousands of units … that is a huge amount of supply,' RR Living CEO Melanie French said. 'You see building happening everywhere.'"

"Class-A properties have been the hardest hit, and that is because they are competing with the new deliveries, McClenny said. As of November, the highest-end cohort of apartments was 87.4% occupied, compared to 92.7% in Class-B and 91.9% in Class-C, according to MRI ApartmentData. 'The move-ins are all happening in the Class-A space, but the problem goes back to supply,' he said. 'When you add 3,000 to 4,000 units every month, there’s no way you are covering that in terms of move-ins.' Hundreds of new projects launched over the last three years, but those units are delivering into a market on its way to becoming oversupplied — a phenomenon most didn’t see coming when demand was red-hot, McClenny said."

Bisnow on Massachusetts. "Coming out of a white-hot streak during the early years of the pandemic, Boston's life sciences market looks like a bucket of ice water has been dropped on it. After billions of dollars in venture capital funding fueled a flood of new biotech leasing and development in the sector, a slowdown was inevitable, but several industry experts told Bisnow they didn't expect one of this magnitude for the nation's most significant lab cluster. 'We've never seen a slowdown of this magnitude in life science,' JLL Executive Managing Director Bob Richards said. 'The challenge is the ability of existing companies to raise additional capital and produce companies to raise initial capital. That has been what has caused the slowdown, primarily.'"

"Across the market, total vacancy reached 21.2% this quarter, according to new data JLL shared with Bisnow, a massive jump from 9.9% at the beginning of the year. 'We've literally gone from a hot summer day to a cold winter evening,' Richards said. This sudden shock came from the pain that hit the biotech sector. As of October, at least 17 Boston-area biotech companies had shut down this year, almost triple that of 2022, the Boston Business Journal reported. 'There's sort of the elephant in the room of the potential oversupply that's coming with new development trying to finish their construction as we come into '24 and '25,' CBRE Director of Research Suzanne Duca said.""

The Mercury News in California. "A big office complex in Concord has been bought in a deal that suggests property values have nosedived for Bay Area offices in the wake of the coronavirus-spawned business lockdowns. Concord Corporate Centre has been bought for $20 million by an affiliate of Sierra Pacific Properties, a real estate firm controlled by the Seeno family, according to documents filed on Dec. 14 with the Contra Costa County Recorder’s Office. That price is 68.5% below the $63.5 million that the sellers in the deal, Harbert Management, paid in 2017 for the two-building office complex. The deal is an example of the collapse in values for Bay Area office buildings in the wake of the coronavirus lockdowns and the uneven return to the office even after the draconian government-ordered building closures were terminated."

Bloomberg on California. "Aon Center, the third-tallest tower in Los Angeles, has sold for $147.8 million — about 45% less than its last purchase price in 2014 — as office values continue to suffer from high vacancies and financing costs. The sale is the largest office deal this year in downtown Los Angeles, which has been among the hardest-hit US office markets since the pandemic as remote work becomes more popular and escalating interest rates drive down values, wiping out owners’ equity. Almost 30% of downtown LA office space was available for lease or sublease in the third quarter, brokerage Savills reported. Many tenants and investors are turned off by the neighborhood’s tough commutes and high homeless population. Rents downtown were 40% lower than in more-desirable areas, such as Century City, where the availability rate was 16%, according to Savills."

"An affiliate of Brookfield Corp., downtown’s one-time largest landlord, defaulted on three office towers in the area this year. An added blow for sellers was a voter-approved 5.5% transfer tax on real estate transactions greater than $10 million that took effect April 1. Office prices nationwide have fallen 35% from a peak in the first quarter of 2022, when the Federal Reserve began raising interest rates to combat inflation, according to real estate analytics firm Green Street."

Hawaii Real Estate Dreams. "Through October this year, 298 houses have been sold in Kona, 288 condos and 77 pieces of land for a grand total of 663. Since sales typically slow over the Thanksgiving and Christmas holidays don’t look for any big changes between now and the end of the year in volume. There are 98 overall properties in escrow as of the end of October, mirroring September’s number of 100, so sales should be similar in November, probably around 60 or so. September vacation rental occupancy dropped again in the state to 52.7%, a 6.3% drop from last September and a 15.4% drop since September of 2019. Pricing is surely playing a part in this since the average room night increased $100 in the state during that same time. I’m getting calls weekly from owners now considering switching from vacation rental to long-term, more consistent income but you don’t get to use the property as often. Some will sell… stay tuned!"

Fox 2 Detroit in Michigan. "Meet custom home builder Dave Nash. Some of Dave’s customers say he has an interesting customer service philosophy. '(He said) 'I'll sue you, you don't know who I am,' Kim said. '(He said) 'You can't do anything to me. My dad's a lawyer,' Kelly said. Dave Nash’s company, Envy Homes, built this house for Chris and Megan. The cost was $440,000. At least, that was what it was supposed to cost. 'I have been asking almost weekly, 'Where we at with the budget?' said Chris."We don't know.' 'Where we at with the budget?' 'We don't know.'"

"Chris is a police officer and $440,000 was the top of his budget. But surprise - when the house was finished, Chris and Megan say Dave Nash jacked the price up another 20,000 onto the cost. 'I didn't want to give him any more money, but I also wanted a house,' Megan said. Chris took the money to the Envy Homes office and handed it to Nash, anyway. 'I handed him a check for almost $20,000,' he said. And he got this handwritten receipt from Dave for 'overages.' But at least they were in the house, which they say has some problems. Problems they told Nash about - and included in their complaint to the state."

"Then a couple of months later and after paying $20,000 in overages …'Today, I received an email saying they put a lien on our house,' Megan said. The couple thinks Dave did it just out of spite. This is the flooring in Kelly and Dan's house. You can see it’s bubbling and has big gaps. 'It's just a mess,' Dan said."

North Shore News. "A B.C. judge has denied a receivership application from the purported majority shareholders of residential development firm Coromandel Properties Ltd. who claim management is threatening the company’s assets. According to the Dec. 12 ruling, shareholders Zhao Ming Mo, Zi Hao Mo, the ZHM Family Trust 2020, and the Birch Family Trust claimed current management is threatening the company's assets by failing to attend to day-to-day operations, pay outstanding professional fees, and respond to the landlord of the company's head office. Management has also failed to respond to correspondence from the Canada Revenue Agency and file tax returns, the shareholders submitted."

"It 'appears to be uncontroverted' that Coromandel manager Zhen Yu Zhong, also known as Jerry Zhong, 'is not carrying out these functions adequately or at all,' wrote Justice Kevin Loo in his decision. However, while Loo agreed the evidence shows Coromandel 'has failed to adequately or properly perform the day-to-day operations of the debtor companies,' the judge found too many problems with granting the application, which was opposed by secured lenders and 'other stakeholders' of the company’s operations. The Mos are the children of Junchao Mo and told the court they own 70 per cent of Coromandel. They said Junchao Mo and Zhong entered a partnership when they launched Coromandel, which now has $700 million of debt and 16 ongoing development projects."

ABC News in Australia. "The NT Property Council says Darwin CBD is already in an 'unenviable position' with the nation's highest vacancy rate — but they expect figures to worsen in the new year. According to their research, 58,000 square metres of commercial office space lies vacant across the Darwin CBD with smaller retail and hospitality venues recording a vacancy rate of around 20 per cent. NT Business and Tourism Minister Joel Bowden attributed Darwin's high vacancy rate to supply and demand. He said despite continued construction projects and the approval of nearly 300 new apartments, not enough people were moving to the Northern Territory. 'We've got nearly 50,000sqm of new commercial space in the pipeline so construction has continued there just hasn't been enough people opening up new businesses over the time,' he said."