Overview

• Commercial real estate sector faces a looming crisis with up to 20% of loans potentially defaulting, leading to direct losses of as much as $160 billion.
• High interest rates and the shift to remote work have led to a devaluation in property values, with 14% of all loans and 44% of office loans currently in negative equity.
• The Federal Reserve's 11 consecutive rate hikes have led to losses of about $2 trillion in the market value of assets within the U.S. banking system.
• $1.5 trillion of commercial real estate debt that must be refinanced is coming due before the end of 2025, posing a significant risk given the low demand for office space.
• Regulators have introduced measures to safeguard banks and customers, including increasing capital requirements for large banks.