This week presents a challenge for the largest American owners of apartments: competition from an excess of brand-new apartment buildings. This year, there are more than 950,000 new apartment units being built, which is a record high. Analysts anticipate that the increased supply will stifle rent growth, particularly in Sunbelt towns where there is a high level of construction activity.
The Farmers Group insurance company’s workers had gotten used to working from home. Employees sold their automobiles, relocated to new cities, or constructed offices in their homes. Those same employees were angry when new CEO Raul Vargas announced that the majority of the company’s 22,000 employees would have to start returning to the office. On an internal business message board, employees sent more than 2,000 comments, the majority of which expressed dissatisfaction or feelings of betrayal. As more businesses phase out pandemic work arrangements, disagreements between employers and employees on return-to-office policies are intensifying this year.
The fact that major corporations are recommitting to office space will excite landlords. Many people have impending deadlines for repaying their interest-only mortgages. There is a growing possibility that many landlords would default on these substantial loans as the value of offices and other properties decreases as a result of increasing interest rates and less occupancy. If interest rates remain where they are, a CoStar analyst predicts that up to 83% of outstanding securitized office loans won’t be able to refinance.