The Commercial Real Estate Alpha Site

Office building owners, hammered by falling demand and high interest rates, had a tough 2023 but next year may be even worse. The U.S. office vacancy rate stands at a record 13.6%, up from 9.4% at the end of 2019, according to CoStar Group, with expectations it could peak at ~17%. Additionally, delinquency rates for office space are expected to be over 8% in 2024.

Landlords likely tried to extend their loans to buy themselves more time but those extensions are set to expire in the coming year. “In 2024, it’s game time,” said Scott Rechler, chief executive of RXR Realty. “Owners and lenders are going to have to come to terms as to where values are, where debt needs to be and right-sizing capital structures for these buildings to be successful.”

Airbnb M&A

Airbnb acquired a secretive AI startup, Gameplanner.AI, on Tuesday. Gameplanner was founded by Adam Cheyer who helped launch Siri prior to its acquisition by Apple and it’s rumored that the purchase price was around $200 million. Airbnb CEO Brian Chesky hinted that the Gameplanner team will focus on “accelerating” select AI projects and integrating their tooling into the platform.

It’s not immediately clear what Gameplanner does (the company doesn’t even have a website) but the acquisition highlights the arms race that is unfolding when it comes to AI. This could be an acqui-hire situation whereby Airbnb leverages their $11 billion war chest to acquire talent to drive their vision forward. It will be interesting to see how this plays out.

The second half of 2023 has been down substantially for AirBnb operators and owners (VRBO, Vacation Rentals, etc) and 2024 looks trepidatious at best with the majority of traveller’s looking to get the most value for their dollar which stretches a bit shorter than in the past. There is also a considerable amount of more supply as new homes/condo’s and properties simply being converted to VRBO’s or rental programs has created some supply surpluses in some areas and many more rental options for vacationer’s.