America Faces Looming Commercial Real Estate Crisis As Offices Empty and Loans Default

America's commercial property market is facing a crisis as office buildings purchased with debt remain half empty post-pandemic. Thousands of buildings may need to be demolished.

Regional banks are exposed to huge losses on commercial real estate loans that they have yet to acknowledge. Hundreds could fail over the next 2 years.

Office rents have already dropped 20% with more declines coming as leases are renegotiated. Values have fallen 40-45%, wiping out equity holders.

Up to $1 trillion in commercial property debt is coming due and needs to be refinanced at much higher rates. This threatens a wave of developer defaults.

While not as dire as 2008, losses spread across small banks could still trigger a systemic crisis if deposit flight forces fire sales of assets.