Potential commercial real estate collapse could threaten 300 banks, exacerbated by declining demand and remote work

From Yahoo Finance: 2025-04-18 15:30:00

$2.7 trillion in commercial debt is set to mature in the next 30 months, raising concerns about the global economy. Real estate investor Grant Cardone warns that this debt could have significant ramifications, potentially affecting 300 banks. The looming crisis is exacerbated by declining demand for office space due to remote work trends.

Cardone predicts that more than 300 banks could go out of business if commercial real estate prices crash. The risk of leverage in real estate investments is highlighted, with fewer tenants leading to lower rents and vacant units. Over-leveraging combined with declining demand poses a threat to financial institutions and can impact tax revenue in major cities.

Commercial real estate properties are facing declining values, with some selling for as low as 10 cents on the dollar. Remote and hybrid work trends, along with demographic shifts like low fertility rates, are contributing to vacancy rates. Trump’s tariffs may influence interest rates, potentially easing refinancing for commercial real estate loans.

The potential collapse of commercial real estate, fueled by the $2.7 trillion debt, remains a looming threat. Cardone’s warning about the crisis is underscored by the current market conditions and risks associated with over-leveraging. The industry faces challenges from changing work patterns, demographic shifts, and economic policies.



Read more at Yahoo Finance: ‘The Problem Is So Big It Can Drag Down 300 Banks’