Barry Sternlicht just gave a VERY thoughtful interview about the...

Barry Sternlicht just gave a VERY thoughtful interview about the growing troubles in commercial real estate:

Here's what he had to say:"We have a problem in real estate. In every sector of real estate, not just office, because of the 500 basis point increase in rates that was vertical.

The office market has an existential crisis right now... it's a $3 trillion dollar asset class that's probably worth $1.8 trillion [now].There's $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is... There are buildings in New York that were bought for $200 million... the loan was $100 million and we [personally] thought it was worth $30 million.

There's a building for sale right now in San Francisco. It was bought for $850 per sq ft. The loan was $450 per sq ft. They'll [probably] sell it for $250 per sq ft... that's $0.25 on the dollar. That would mean we lost three-quarters of the total asset class...

This asset class is not just owned by rich people. It's owned by pension plans and other people... small investors. We're not just talking about towers. We're talking about the buildings that surround towns and municipalities.

What happens to those cities? But there is a bright spot - the office situation is a completely US phenomenon. I just was in Munich last week, and rents in Munich are up 15%. The vacancy rate in Munich is 2% for Class A. In Seoul, Korea, it's 1%. In Tokyo, it's 4%.

Everyone's back to work except for Americans. We've gone off the deep end. We don't show up for work, we don't apply for jobs, and we don't feel like we have to go back to the office."