For nearly a decade, the 14-story Houston office building called Northborough Tower proved a reliable investment for fund manager Behringer Harvard, staying fully leased and generating millions in profit.
But now the gleaming building is being surrendered to creditors. Its $21 million mortgage came due in January, and Behringer Harvard wasn’t able to find buyers willing to pay more than that. At the same time, its only tenant is leaving and the Houston office market is reeling from low oil prices...
The Northborough Tower is one of numerous office buildings in which debt is coming due in the Houston area, where the amount of office space vacant or soon to be available for lease was 23% at the end of 2015, up from 17.8% a year earlier, according to real-estate services firm Savills Studley. With vacancy expected to rise further still, investors are staying away from the area and lenders have grown particularly wary.
Worse yet are the oil-drilling boomtowns in west Texas and North Dakota, where apartment rents have plunged thanks to a growing level of new supply hitting the market at the same time that low oil prices have sapped demand.
A similar effect can be seen in New York, where the condominium market aimed at the superrich has slowed just as a wave of towers are hitting the market...Now Coming to the Commercial-Property Market: Defaults
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