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CRE Finance World, Winter 2013

Office Vacancies and Efficient Space Use “More efficient use of office space has the potential to keep office vacancies elevated over the long term, which in our view would be a credit negative for commercial mortgage-backed securities.” Elevated Vacancies Could Strain Office CMBS Performance Notes While a clear, widespread trend toward more efficient use of space 1 “Trend: Large Companies and Their Move to Efficiently Use Space,” has not yet emerged, we believe such a change could be a moderate Officesnapshots.com, July 24, 2012 hazard for CMBS credit. Overall office exposure in conduit CMBS is 2 “Law Firms Say Good-Bye Office, Hello Cubicle,” Wall Street Journal, about 32%, though the 2012 vintage contains only 27% year-to-date. July 15, 2012 More efficient usage of space could keep the office vacancy rate elevated, which in turn would likely lower rents. Combined, these 3 “Presidential Politics Delay Manhattan Office Leasing,” TheRealDeal. effects could be detrimental to property-level NOI and DSCR. com, Aug. 2, 2012 4 “Step Into the Office-Less Company,” Wall Street Journal, Sept. 4, 2012 Related Criteria And Research •A Recovering Office Market May Not Move the CMBS Office Credit 5 “A Recovering Office Market May Not Move the CMBS Office Credit Needle, Aug. 8, 2012 Needle,” Standard & Poor’s, Aug. 8, 2012 I N S U R A N C E R E V I E W & A N A L Y S I S T ustedr by the world’s leading lenders Harbor Group is the premier insurance consulting firm to investment banks, capital market lenders, and commercial banks. For over 20 years, from comprehensive insurance review to advisory services, our seasoned expertise provides prudent, time-sensitive counsel. I N S U R A N C E C O N S U L T A N T S Telephone: (212)336-0816 WITH OFFICES IN NEW YORK AND MIAMI Lfields@harbor-insurance.com A publication of Winter issue 2013 sponsored by CRE Finance World Winter 2013 51


CRE Finance World, Winter 2013
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