Commercial Real Estate: The Next Crisis?
By sarah-jenkins
Financial Analyst
The “Return to Office” mandates have largely stalled. Hybrid work is the new normal. This structural shift is causing a slow-motion crisis in the Commercial Real Estate (CRE) sector, specifically office space.
Live Market Data
Index: CLR-500
The Vacancy Problem
In major cities like San Francisco and New York, office vacancy rates have hit historic highs. Buildings that were valued at $100 million in 2019 are trading for $40-50 million today.
The Refinancing Cliff
Commercial loans are not like 30-year fixed mortgages. They are usually 5-year or 10-year balloons. Trillions of dollars of CRE debt is coming due in the next 24 months. These building owners need to refinance at 7% interest rates (up from 3%) while their buildings have high vacancies and lower valuations.
Who holds the bag?
Regional banks hold a disproportionate amount of CRE debt. If developers hand back the keys, these banks could face solvency issues, potentially triggering a credit crunch that affects the broader economy.