Once considered a major source of revenue for American cities, central business districts and downtown areas are no longer as attractive to investors. According to a recent Wall Street Journal article, REITs focused on CBD property have dropped below half their pre-pandemic levels while bondholders demand extra interest for office-building debt. This is largely attributed to the continued work-from-home trends that have caused occupancy hits in office buildings. Subsidiaries of Pacific Investment Management and Brookfield Asset Management recently defaulted on more than $2 billion In CMBS on office towers in New York Los Angeles and San Francisco due to this trend. Additionally, public transportation ridership is at less than 70% of pre-COVID levels in major metros across the country.
Analysts from Asset Preservation Advisors told WSJ they remain “confident” about tax backed bonds sold by New York City and Boston; however they are wary about debt issued by other Northern urban centers as well as larger California cities due to people not returning back into these areas for work purposes – leading them towards suburban bonds issued from lower tax Southern or Western states instead which are attracting companies and workers away from northern big city centers . As such, Ken Woods (founder & chairman) has stopped buying the New York Metropolitan Transportation Authority’s fare backed debt unless it matures soon..
