{"id":3349,"date":"2023-10-26T20:48:38","date_gmt":"2023-10-26T20:48:38","guid":{"rendered":"https:\/\/cred-iq.com\/blog\/?p=3349"},"modified":"2024-12-25T02:08:47","modified_gmt":"2024-12-25T02:08:47","slug":"valuation-trends-for-q3-2023","status":"publish","type":"post","link":"https:\/\/cred-iq.com\/blog\/2023\/10\/26\/valuation-trends-for-q3-2023\/","title":{"rendered":"Valuation Trends for Q3 2023"},"content":{"rendered":"\n<p>CRED iQ analyzed 480 properties that were re-appraised in 2023.&nbsp;The Top 25 Valuation declines all received an updated appraisal in Q3 2023.&nbsp; Each of these properties were either delinquent or with the special servicer.&nbsp;<\/p>\n\n\n\n<p>In total, the average decline in value compared to the original valuation at issuance was 41.6% &#8211; a very slight overall increase of four basis points over our <a href=\"file:\/\/\/C:\/Users\/Chris%20Aronson\/Desktop\/first%20half%20report\">first half 2023 report<\/a>.\u00a0<\/p>\n\n\n\n<p><strong>Sector Perspectives<\/strong><\/p>\n\n\n\n<p>Notable changes appeared in the ranking by property type.\u00a0 Notably Industrial jumps from 6<sup>th<\/sup> place in <a href=\"file:\/\/\/C:\/Users\/Chris%20Aronson\/Desktop\/first%20half%20report\">first half report<\/a> to 1<sup>st<\/sup> place in Q3.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"457\" height=\"409\" src=\"https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-2.png\" alt=\"\" class=\"wp-image-3352\" srcset=\"https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-2.png 457w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-2-300x268.png 300w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-2-150x134.png 150w\" sizes=\"auto, (max-width: 457px) 100vw, 457px\" \/><\/figure><\/div>\n\n\n\n<ul class=\"wp-block-list\"><li>By property Type, office and retail had the highest percentage-based declines . Office averaged a 50.3% decline, while retail properties averaged 51.7% decline across the sample set of CRED iQ data.&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>The office average decline is slightly up from our last analysis in July when office valuations declined 48.7% on average.&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Comparing Q2 2023 with our current analysis, the average multifamily valuation decline deteriorated this quarter from 22.0% to 33.6%.&nbsp;&nbsp;Likewise Industrial dropped from a 21.2% decline to a 32% decline in Q3<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Self-storage remains the strongest asset class with no specially serviced or delinquent loans reporting a decline in value this year.&nbsp;<\/li><\/ul>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"825\" height=\"592\" src=\"https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-1.png\" alt=\"\" class=\"wp-image-3350\" srcset=\"https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-1.png 825w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-1-300x215.png 300w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-1-768x551.png 768w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-1-696x499.png 696w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-1-150x108.png 150w\" sizes=\"auto, (max-width: 825px) 100vw, 825px\" \/><\/figure><\/div>\n\n\n\n<p>Here are the most notable properties that made our Q3 list:<\/p>\n\n\n\n<p><strong>1740 Broadway, New York City<\/strong><\/p>\n\n\n\n<p>CRED iQ first <a href=\"https:\/\/commercialobserver.com\/2022\/03\/blackstone-1740-broadway-cmbs\/\">alerted<\/a> the industry of this distressed 604,000 square foot office tower in Manhattan back in March 2002 when it first defaulted.&nbsp; The property topped our list with a stunning valuation loss of $430 million, or 71.1% of its value.&nbsp; At origination, the collateral was valued at $605 million ($1,002\/SF).&nbsp; Its latest appraisal posted a valuation of just $175 million ($290\/SF).&nbsp;<\/p>\n\n\n\n<p><strong>229 West 43<sup>rd<\/sup> Street, New York City<\/strong><\/p>\n\n\n\n<p>This property topped our list of valuation drops in our <a href=\"file:\/\/\/C:\/Users\/mhaas\/Downloads\/first%20half%20report\">first half 2023 report<\/a>. &nbsp;A 248,457 square foot apartment\/retail mixed use property lost $386 million in valuation since origination or 82.1%&nbsp;<\/p>\n\n\n\n<p><strong>Woodbridge Center: Woodbridge, New Jersey<\/strong><\/p>\n\n\n\n<p>Holding its grip on third place in our study is this 1.1 million square foot mall in NJ which lost 76.5% of its valuation, or $280 million.&nbsp;<\/p>\n\n\n\n<p><strong>Nema: San Francisco, California<\/strong><\/p>\n\n\n\n<p>This 754-unit apartment complex cracks the top 5 for the multifamily category\u2014seeing its valuation at origination of $543.6 million decline by 48.7% to $279 million\u2014a reduction of $264.6 million.<\/p>\n\n\n\n<p><strong>Park Place Mall: Tucson AZ<\/strong><\/p>\n\n\n\n<p>Our second of two malls in the top five, this 478,333 square foot retail property lost 72,2% of its value from its origination of $313 million to $87 million.&nbsp; On a price per square foot basis, the mall\u2019s valuation is at $182\/SF, a significant drop from $654\/SF at loan origination in 2011.&nbsp; &nbsp;<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"497\" height=\"621\" src=\"https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-3.png\" alt=\"\" class=\"wp-image-3351\" srcset=\"https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-3.png 497w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-3-240x300.png 240w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-3-150x187.png 150w, https:\/\/cred-iq.com\/blog\/wp-content\/uploads\/2023\/10\/CMBS-Valuation-CRED-iQ-LOAN-3-300x375.png 300w\" sizes=\"auto, (max-width: 497px) 100vw, 497px\" \/><\/figure><\/div>\n\n\n\n<p>As we stated in our first half report, the current market conditions are having a significant impact on the valuation of commercial real estate properties across all asset classes.&nbsp; Our overall valuation declines remained mostly flat compared to our first half report.&nbsp; The most notable developments in Q3 were at the property type level with Industrial and Multifamily seeing their sector loss percentages grow by&nbsp; ~ 11% each.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-buttons alignfull is-content-justification-center is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/cred-iq.atlassian.net\/servicedesk\/customer\/portal\/2\/create\/19\" target=\"_blank\" rel=\"noreferrer noopener\">CRED iQ &#8211; Free Trial Access<\/a><\/div>\n<\/div>\n\n\n\n<p>Please look for our year-end valuation report in December.&nbsp;&nbsp;&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>CRED iQ analyzed 480 properties that were re-appraised in 2023.&nbsp;The Top 25 Valuation declines all received an updated appraisal in Q3 2023.&nbsp; Each of these properties were either delinquent or with the special servicer.&nbsp; In total, the average decline in value compared to the original valuation at issuance was 41.6% &#8211; a very slight overall [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":3354,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[9,3,11],"tags":[4,5,8,10],"class_list":{"0":"post-3349","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-research","8":"category-top-stories","9":"category-valuation-updates","10":"tag-cmbs","11":"tag-commercial-real-estate-data","12":"tag-loan-data","13":"tag-valuation"},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/3349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/comments?post=3349"}],"version-history":[{"count":1,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/3349\/revisions"}],"predecessor-version":[{"id":4292,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/3349\/revisions\/4292"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/media\/3354"}],"wp:attachment":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/media?parent=3349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/categories?post=3349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/tags?post=3349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}