Downtown Office Landlords Face Refi Challenges in 2023
2023 could prove tough going for downtown Chicago office landlords whose mortgages come due, reported Crain’s Chicago Business. They’ll face the twin challenges of higher interest rates and downtown’s record-high vacancy rate of 21.3%.
Crain’s reported that many won’t be able to borrow as much as they could before, creating a financing gap. Some will dip into their own pockets to refinance their debt or raise the money by selling their buildings. Others will simply default.
“At some point, guys may say this is too heavy a lift,” says Manus Clancy, senior managing director at Trepp. “This is just throwing good money after bad.”
As a case in point, Crain’s cited 601W Companies’ 83-story Aon Center, where a $678-million debt package matures on July 1. The property’s $536-million senior loan carries an interest rate of 4.63%, compared to the low-to-mid 6% range likely today, Clancy told Crain’s.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).
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