Skip to content
Subscriber Only

San Francisco, L.A. Office-Tower Vacancies Threaten CMBS Loans

  • 225 Bush, 300 Montgomery towers losing tenants: Morningstar
  • Occupancy in L.A. building drops to 54% from 81%, analysts say
Workers Return To Office As California Plans To Full Reopen
Photographer: David Paul Morris/Bloomberg

Office-tower vacancies are rising again as the Covid-19 delta variant rages and as large tenants end leases, especially in tech hubs that have older buildings. That could lead to cash-flow problems for commercial mortgage bonds containing loans tied to the properties.

Two San Francisco office properties, 225 Bush and 300 Montgomery, as well as the Cahuenga West Office Building in Los Angeles, have seen occupancy drop, according to a report from Morningstar Credit Information & Analytics. The rising vacancies potentially threaten cash flow for three loans that were securitized in various multi-loan, or “conduit” commercial mortgage-backed securities deals, MCIA said.