The ailing office market is headed for $1 trillion of losses, billionaire and Starwood Capital CEO Barry Sternlicht said.
Per Bloomberg, Sternlicht said at the Global Alts conference in Miami Beach that US office properties, once a $3 trillion market, are worth about $1.8 trillion now. The cratering values have been the result of remote work being solidified as a lasting legacy of the COVID-19 era.
The billionaire characterized the dilemma facing the office segment of the commercial property market as an “existential crisis” and slammed the Federal Reserve for leaving a “serious mess” in capital markets and the real estate market.
The fourth quarter of last year saw the US office market mark its fifth straight quarter of negative net absorption of office space. With 5 million square feet of new supply, the overall office vacancy rate rose to a 30-year high of 18.6%, according to CBRE.