In some respects, solving the puzzle of the looming office space crisis is a bit like being tasked with designing a plan to save the dinosaurs.have changed the environment and the behaviours that shape it. Despite efforts by companies to cajole and compel people back to offices, vacancy rates in the U.S. and Canada remain around 20 per cent., is just the tip of the iceberg.
You don’t need an MBA to understand that a tenant moving from a loan rate of 2 or 3 per cent to one that is 7 per cent or higher for a commodity that is losing value as the environment changes is not a rosy prospect. Extensions aren’t cheap – if you have a home mortgage, you know the fees of refinancing can be backbreaking – but they are a lesser evil than a long-term lease with a rate in the high single-digits.
The Mortgage Bankers Association is tracking US$929-billion in maturities in 2024, a rise of US$270-billion from the beginning of 2023. Since construction of new office space has ground to a halt, this suggests the increase represents loan extensions.