Part 8/16:
The Intertwined Crisis in Commercial Real Estate
Adding to the economic turmoil is the ongoing commercial real estate (CRE) crisis, which is tightly linked to the wave of bankruptcies. Office building loan delinquencies hit 11.1%—the highest since 2008, and six times higher than early 2023. The shift towards remote work has caused vacancy rates to spike, leading to defaults and plummeting property values, with some buildings selling at 60-90% discounts**—sometimes even lower when adjusted for inflation.
These distressed properties are a visible sign of economic stress and threaten to trigger further financial instability, especially given the large debt loads many property owners have accumulated.