Two days after the election, I wrote a column on the potential impact of the Trump presidency on the overall economy. Subsequently, I was quoted in a fascinating piece in Bloomberg by Tom Maloney and Natalie Wong discussing how the President-elect‘s assets may be affected by his election, including his real estate holdings. A link to the article is below.
I was specifically asked about 40 Wall Street, for which Mr. Trump owns the ground lease. According to the article, that building is currently 74% leased and has been hit hard by the pandemic like so many other older buildings. However, I distinguished it from the current situation at the Chrysler Building which is another venerable Art Deco building that is approximately 100 years old, and is involved in litigation to remove the ground lessor. The piece stated the following:
“With Trump as president, any kind of aggressive action by a lender, or a ground lessor, will be difficult to pursue for obvious reasons, said Ruth Colp-Haber, CEO of brokerage Wharton Property Advisors.”
As a result, I stated the obvious: “To become president is to have the ultimate leverage”.
Turning to the bigger picture, yesterday Howard Lutnick who serves as executive chairman of Newmark among other posts, was named as Secretary of Commerce. It will be interesting what he does regarding the struggles of the office market from his position, which may be a better platform than Treasury for dealing with that issue. That is because the Treasury department has such a much wider focus than Commerce whose specific mission is to create the conditions for economic growth and opportunity for all communities.
Indeed, the semi-annual supervision and regulation report of the Federal Reserve Bank issued this month stated that while liquidity and funding conditions remain stable, credit performance in commercial real estate lending continues to show signs of weakness. More specifically, the report stated that “loans secured by offices, especially those in major cities, remained the top concern.” At the large banks, the delinquency rate for office loans increased to 11% in the second quarter of 2024, the highest level in 10 years. Accordingly, this should be an action item for the new administration.
Further, the good news is that in today’s office market you don’t need to be the president of the United States to get a good deal for office space as bargains abound and astound. Please feel free to tap the expertise of Wharton Property Advisors for all of your office needs. We proudly serve Democrats, Republicans, independents, libertarians, and any other kind of tenant with creativity, integrity, independence, and diligence.
