This Is Going to Be Ugly

It now appears that office rents in Manhattan are set to fall by more than a quarter.

Considering the leverage of most developers, and the relatively short term of real estate loans, they typically have to be refinanced every 5 years, we are looking at a huge number of bad loans popping up in the not too distant future:

Manhattan’s office rents are likely to plummet to the lowest level since 2012 if the U.S. economy doesn’t recover quickly from the pandemic.

Asking rents could decline 26% to about $62.47 a square foot (roughly $672 per square meter) in a prolonged recession, according to a report from Savills. Rents haven’t fallen to that level since 2012, the real estate services firm said.

………
Savills’ research used indicators that it says are correlated to rental rates, including gross domestic product, unemployment and office vacancies in Manhattan.

Also, there is going to be a f%$# load of work from home which is likely to permanently depress office demand, because literally hundreds of thousands employers have discovered that you don't have to have someone in the office 5 days a week. and that it saves them a fair chunk of change.