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The decline in office values in the United States is triggering an increase in commercial transactions, but at considerably reduced prices, forcing lenders to prepare for potential bad loans.
For a long time, the $20 trillion US commercial real estate market has avoided an adjustment, as potential sellers were unwilling to part with properties at distressed prices.
However, the situation is changing, and transactions across the country are revealing the true extent of the decline in property prices. This is generating concerns about potential losses that could spread throughout the global financial system. Some property owners will be forced to sell when their loans mature, as over $1 trillion in commercial loans are set to mature in the coming year. The repercussions of this situation could be significant, as global investors, US cities, and lenders face financial risks stemming from the decrease in commercial office values.