Galleria-Area Office Building Heads To Foreclosure Auction

The financing crunch that has impacted commercial real estate, where traditional financing sources went from being flush with capital to frozen in the past few years, has produced many losers. But a clear winner has been the alternative financing sector, which is seeing increased demand amid the regional banking crisis, rising interest rates and market uncertainty. 

An estimated $1T in commercial real estate loans are coming due in the next 18 to 24 months, 10% to 20% of which will struggle to refinance, according to Michael Boxer, managing director of private real estate debt at CenterSquare. Special servicers and private lenders are staffing up in response to that coming demand, he said.

Alternative financiers and private lenders will see new opportunities for business, leading to growth and new hires. A solution to today’s CRE problem, loans coming due that simply aren’t worth what they were when they were written five or 10 years ago, requires extensive financial and underwriting experience. The job…

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The shiny office towers that developers have built in U.S. downtowns in recent years have increasingly drawn tenants away from older buildings, but the demand shift toward top-tier space hasn't been followed by new supply. 

New year-end data has shown high demand for top-quality space and shrinking vacancy in the trophy and Class-A segments across major U.S. markets like Miami, D.C., New York and Chicago. But experts in those cities tell Bisnow they anticipate the headwinds facing the overall office sector will continue to restrict new supply and make the market for trophy tenants even tighter. 

Lenders seeking to reduce their overall exposure to office are either unwilling to finance new projects or are requiring a higher level of pre-leasing commitments, developers and brokers said. In some markets, potential tenants aren't able to plan ahead enough to sign the deals necessary to move projects forward. 

"I've got some groups I think that would be interested in leasing, but I can't get it financed unless they commit, and they're not going to commit three to four years out," said Cushman & Wakefield Vice Chairman  Brian Gale, based in Miami. "It's that Catch-22 between the…

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