The crisis in the U.S. commercial real estate market, especially the office sector, is intensifying at a speed exceeding expectations. The latest data shows that the default rate of office loans in commercial mortgage-backed securities (CMBS) has rea

According to Trepp, a data analytics company, the default rate of U.S. office building CMBS has soared to 11.8% in October this year. This figure is not only the highest level in history, but also exceeds the peak of 10.7% during the global financial

More worrying is the trend of crisis spreading. Pressure is no longer confined to office buildings, and the CMBS default rate for multi-family residential real estate has also risen sharply by 53 basis points in October to 7.1%, which is the worst le

The formation of this storm was alarming in speed. In just three years, the default rate of office building CMBS soared from 1.8% in October 2022 to more than 10%. During this period, the Fed's continued interest rate hikes tightened the credit envir

Structural Transformation and the 'Wall of Refinancing'

The core problem in the current U.S. office market is not a cyclical short-term weakness. The telecommuting model has been solidified after the epidemic and currently accounts for about 28% of full-time working hours, nearly six times the pre-epidemi

The looming "maturity wall" of debts is worsening the situation. In 2025 alone, up to $957 billion of commercial real estate debt is due to mature, with office loans accounting for approximately $230 billion. Many loans originally due in 2024 have be

A series of high-profile project default cases are emerging. The Bravern Office Commons, a landmark building complex in Bellevue, Washington, which has been long-term leased by Microsoft, has had its 304 million USD mortgage loan recorded as a defaul

The Factory project in Long Island City, New York, has also defaulted on a $300 million mortgage loan. In addition, a "balloon loan" default has occurred at the Federal Center Plaza in Washington, D.C. that cannot be repaid. Meanwhile, some loans hav

Crisis Spreads: Who Bears the Loss?

The shockwave of the office building crisis is spreading to the broader financial system, with regional banks holding a large exposure to commercial real estate loans bearing the brunt of it.

Among the 158 largest banks in the US, 59 have commercial real estate loan exposures exceeding 300% of their equity. New York Community Bancorp has recorded a loss of $2.7 billion by the end of 2023 due to this. Once the loan extension strategy fails

Another deeper risk lies in municipal finance. The collapse of office building asset values directly leads to the evaporation of local government property tax revenue. New Orleans has become a "canary" in this regard. Due to loan defaults and soaring

Based on the CMBS structure, the ultimate bearers of losses are not the banks that issued the loans. When these mortgages are securitized and sold in packages, the risks are transferred to global institutional investors. According to media analysis,