Office vacancy rates in San Francisco and Manhattan have hit new highs, climbing up to 29.4% and 16%, respectively, in the first quarter of this year. And according to Goldman Sachs, it could get worse from here.
On Monday, analysts at Goldman Sachs published a note arguing that after two years of rapidly increasing valuations and praises of its strength, “the narrative has turned much more negative,” for the commercial real estate market. Analysts cited downward pressure on net operating income due to declining rent growth and rising vacancy rates (in some cases), all of which has exacerbated the sector’s vulnerability, putting commercial real estate borrowers at a higher risk of payment shock on their liabilities.
