Industrial real estate companies are faring better than their counterparts saddled with vacancy-plagued office towers.Office vacancies and debt defaults are two signs of the current difficult times for the world’s largest real estate companies.roubles are afoot in the world of commercial real estate. With fewer people going to the office in large American cities, a record 20% of U.S. office space was vacant as of the first quarter of 2023, according to brokerage JLL.
The top-ranked property company this year is, at No. 220, China Resources Land Limited, the construction and property management arm of a Chinese state-owned conglomerate. It’s known for owning the MixC brand of shopping and leisure complexes in southern China. The highest ranked U.S. company in this category, at No. 447, is American Tower Corporation, a REIT that owns and operates 226,000 cell tower sites in 26 countries and has a market capitalization north of $85 billion. Revenues for 2022 expanded by 14.5% to $10.7 billion, while the company’s net income contracted by one-third from the prior year to $1.7 billion. It’s a highly indebted operation, with $36.6 billion in debt at the end of December 2022–an amount that’s 5.
Some in the real estate industry have acknowledged the difficult environment. Owen Thomas, the CEO of office REIT Boston Properties, said in an earnings call back in February that “commercial real estate markets are currently in a recession.” Boston Properties has been hit by tenants including WeWork reducing their footprints in its buildings. Shares of the company have fallen by nearly 50% in the past year.
Not all property companies are struggling. Firms in certain sectors, such as gaming and industrial real estate, are seeing greater success. At No. 461 Prologis, one of the world’s largest warehouse investment trusts, has about 1.2 billion square feet of space as of March 31, up from about 1 billion square feet a year earlier. Analysts view logistics real estate as a safer bet in the current environment than its office and retail counterparts.
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