The US commercial real estate market seems to be facing a massive markdown. A Washington DC office building was sold at a whopping 75% discount. A real estate entrepreneur in a post on X said that 175 thousand sq ft tower in Vermont Avenue was sold for $16 million. Previously in 2006, the building was sold for as much as $60 million. The post further mentioned that the building's assessed value in 2018 was $72 million.
The commercial real estate market in the US has been under intense pressure amid rising interest rates over the past couple of years. Since the FED's interest rate hike in March 2022, the prices in US have tumbled by 11%.
As per media reports, last week too, an 11-story office tower in San Francisco was sold at a 60% discount. The 56 year old building located at 60 Spear Street was brought for $41 million from Clarion Partners that had acquired the property in 2014 for $107 million.
Meanwhile, Kotak Mutual Fund's Managing Director Nilesh Shah while reacting to the Washington DC building post mentioned that the building goes for Rs 7,589 per square foot. He then asserted that the US commercial real estate is in deflation.