Aon Center, the third-tallest tower in Los Angeles, sold for $147.8 million — about 45% less than its last purchase price in 2014.
Photographer: Michael Lee/Moment RF/Getty Images
The Brutal Reality of Plunging Office Values Is Here
Commercial-property deals in the US are starting to pick up — at deep discounts that are forcing lenders around the world to brace for souring loans.
The shakeout in the $20 trillion US commercial real estate market has long been delayed for a simple reason: No one could figure out just how much properties were worth. And, more crucially, few wanted to.
Since the Covid-19 pandemic upended the use of real estate around the world, lenders have had little incentive to get tough on borrowers squeezed by soaring interest rates and take on loans that had lost value. Transactions ground to a halt as potential sellers were unwilling to unload buildings at distressed prices — an outcome that allowed them to pretend that nothing had fundamentally changed.