Oversupply Leads to Higher Concessions in the Office Sector

This article hit home as it directly effects the commercial real estate refinance market in the office sector. There have been two projects that we worked on recently where the concessions were much greater than the sponsor anticipated thereby modifying the loan proceeds. In both cases the commercial real estate mortgage interest rates have remained steady and we were able to cut costs in a few areas getting us close to the original dollars. We agree, as Homa notes, that base rental pricing hasn’t changed much so there’s been an ability for lenders to provide additional funds as the concessions burn off. Keeping an eye on each market is difficult and the article did a good job of spelling out which ones are more challenged than others.

-Adam Horowitz, Principal of Lever Capital Partners and President of the Real Estate Capital Alliance

Click here to read more about the oversupply problem and higher concessions in the office sector.