More than six years after the Covid-19 pandemic emptied offices around the world, the bet that time would heal the US commercial real estate market is ending. For years, lenders extended troubled loans rather than crystallize losses, on the assumption that lower interest rates and returning workers would eventually rescue them. But borrowing costs have stayed persistently high, and the Federal Reserve’s rate hike last week — and the prospect of more to come — means little relief is in sight. Billions of dollars of property loans are maturing and patience is running out.
“I joke that sometime between last year and this year was when hope that rates would decline died,” said Josh Morris, partner in global real estate at Davidson Kempner Capital Management. “There’s broader acceptance of the reality that we’re in a different regime than we were previously.”
The strains are particularly apparent in the mortgage-backed securities market, where the delinquency rate for US office CMBS reached 12% last month, according to Trepp, near a record and above levels hit in the aftermath of the 2008 global financial crisis.
America’s office bust is entering a new phase. With interest rates staying high and billions in debt coming due, landlords face a choice: put more money into struggling towers or walk away https://t.co/7wraxSjl5p
— Bloomberg (@business) September 21, 2026
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