Essays by John McNellis

Empty Offices: A Life Science Solution?

These are the times that try landlords’ souls. Office building owners are scrambling, some tossing the keys to their lenders, others gilding their buildings to attract the few tenants left in the market, still others eager to convert their towers into uses not beset by the wasting disease of work-from-home.…

Commercial RE: Firetrucked… but not forever

Henslowe: …Strangely enough, it all turns out well. Fennyman: How? Henslowe: I don't know. It's a mystery. – Shakespeare in Love Real estate industry conferences this season have been so downcast that one could sum up their conclusions about our business with a single unprintable word. As to that, here’s…

Lies, Damned Lies, and Financial Statements

Bankers know that developers’ financial statements are rife with dubious valuations based on hopeful assumptions and guesswork. So why do they insist on them? Franklin Delano Roosevelt’s first vice president, “Cactus Jack” Garner, is fondly remembered for having observed, “The vice presidency isn’t…

Hard Money for Hard Times

To everything turn, turn, turn There is a season turn, turn, turn And a time to every purpose under heaven A time to borrow, a time to lend* Some pundit proclaimed that commercial real estate skipped the recession and went straight to the depression. Like most blanket statements, that one is full of…

Commercial RE Mid-Year Report: Something’s Gotta Give

Stick real estate in the time-out corner, and 2023 is looking far better than the experts prophesied six months ago*. The S&P 500 is up 16 percent, layoffs are dropping, and economic growth has been so strong—and inflation so stubborn—that Fed watchers are predicting two more rounds of rate hikes. Now,…

Buying Time in San Francisco

My recent observation that San Francisco’s office market has lost 60 percent of its value may have been optimistic. In the last month, a quality high-rise at 350 California Street has apparently gone into escrow at a price 75 percent less than its 2020 value. If it closes at its reported $67 million…

Office Meltdown pits Borrowers against Lenders

Writers of self-help books swear grief has five stages—denial, anger, bargaining, depression, acceptance. They could be right. According to JP Morgan Chase, 21% of office building loans across the country have gone bad. The borrowers of these loans were definitely in denial, are likely still angry,…

SVB: Monogamy’s Downside

Silicon Valley Bank’s overnight collapse cold-plunged us into reality, a grim reminder that nothing is more constant than fear and greed. The bank's failure has us all scurrying to protect ourselves. We hold an SVB letter of credit as rent security from a start-up tech tenant, and we have an operating…

Could Turkey’s Disaster Happen Here?

The humanitarian tragedy in Turkey and Syria—50,000 plus deaths and more than a million homeless—was triggered by a 7.8-magnitude earthquake (M7.8). Could it happen here? The earthquake could. San Francisco’s 1906 earthquake was estimated at M7.9 and California’s Cassandras have been predicting another…

Going All-Electric at our Peril

Our electricity went out during that last big storm. The winds had wracked a nearby power pole and a line snapped. PG&E responded well, its crew working through a night of howling rain while we “glamped” at home. Like pioneers, we read by candlelight and went to bed early. Our experience was far from…


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