This chapter explores the risks faced by financial institutions and lenders worldwide due to the empty-office problem in commercial real estate. It discusses notable examples, such as New York Community Bank and Ozora Bank, which have suffered losses tied to US commercial real estate and raises concerns about bad loans. Additionally, it examines the implications for the US banking industry and speculates on potential beneficiaries.
The commercial real estate market has been upended by changing office habits and rising interest rates. For years, lenders and global investors did not have to confront these plunging building values. But with deals picking up again, the reality can no longer be ignored.
On today's Big Take podcast, Bloomberg real estate reporters Natalie Wong and Patrick Clark share how these losses may ripple across the global financial system.
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