Research section
Signals on distress, repricing, volatility, office conversion pressure, and defensive underwriting.
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Distressed office prices reflect different outcomes: continuing office use, a funded turnaround, conversion, land reuse or unresolved impairment. A low price per square foot alone does not identify an opportunity.
The Q1 snapshot remains a historical baseline; the current review uses MBA’s Q2 investor-group levels and Trepp’s August CMBS measures. Credit risk differs by lender, property and failure mode, with office workouts and maturity-driven shortfalls still material.
Broker opinions of value relative to current principal indicate collateral pressure within the dated sample. They do not predict a realized trust loss, the amount of new debt available or the ultimate recovery.
The Q1 record now sits beside August evidence of persistent CMBS pressure: aggregate delinquency was nearly flat while special-servicing exposure increased. Office remains a major workout lane, but borrower income, maturity terms and collateral condition determine the individual case.
An office conversion earns a return only when acquisition basis, building design, approvals, construction costs and timing support the new use. Completed conversions, land repricing and proposals provide different evidence.
Office borrowers face distinct permanent, relationship-bank, transitional and conversion-finance options. Tenant income, sponsor liquidity, basis and required capital determine which option can execute.
Los Angeles offers supply-constrained housing, selected infill industrial and distinct office turnaround strategies. Retail and hospitality outcomes depend on corridor, tenant and operating evidence.
South Florida supports selected housing, retail, medical and logistics investments, with marked differences across Miami-Dade, Broward and Palm Beach. Office and hospitality require their own tenant and operating cases.
Office capital fits three distinct strategies: buildings with demonstrated tenant demand, distressed assets bought at a workable basis, and conversions that pass physical, legal and financial tests. Each needs a funded business plan.
