Chris Walen on the commercial real estate bust

On the commercial side, because of such uncertainty as to what some of these assets are worth, a lot of the big buyers have stepped back and said, "ok, wait, we're going to see what happens."  So, for example, look at some of the marks that the banks are talking about.  Look at what Bank of America's talking about on their commercial loan exposures.  They basically have cut them in half.  And I think that's the appropriate posture for the banks to take.  If they get the money back later, great, they can take a gain.  But I think for now, when you're talking about urban commercial properties, especially older properties, you've got to be very very cautious.  If you read The Real Deal, which is one of my favorite reads, they're cataloguing all of these restructurings and foreclosures and everything else, and it's because these assets are underutilized.  Walk around New York City.  We have lots of tourists, but he buildings are empty.  We still have a really significant underutilization of office buildings in New York, most of the major cities around the country, including the South.  You would think Texas and the rest of the South would be different; they're not.  Atlanta.  It's astounding, but all of these cities are dealing with a sudden change in the use case for commercial properties that nobody anticipated.  It's like we wound the clock back a hundred years, we've taken Henry Ford and kidnapped him, right?  So we don't have this car-centric, commuter-centric model for cities anymore.  People realize that they can work at home.

~ Christopher Whalen, interview, Forward Guidance, 2:45 mark, October 17, 2023