"F or most people the covid-19 pandemic ended years ago. But not for commercial-property investors and their lenders. Working from home prompted an office slump that lasted far longer than mask mandates and lockdowns. Starting in 2022 aggressive interest-rate rises hurt the sector even more, by making mortgage loans far more expensive to roll over. The banks that financed it, especially the smaller ones, have been brutally squeezed as credit quality has deteriorated."
"The torment caused by covid-19 and high interest rates appears to be over F or most people the covid-19 pandemic ended years ago. But not for commercial-property investors and their lenders. Working from home prompted an office slump that lasted far longer than mask mandates and lockdowns. Starting in 2022 aggressive interest-rate rises hurt the sector even more, by making mortgage loans far more expensive to roll over. The banks that financed it, especially the smaller ones, have been brutally squeezed as credit quality has deteriorated."
For most people the covid-19 pandemic ended years ago, but commercial-property investors and their lenders continued to suffer. Working from home caused an office slump that outlasted mask mandates and lockdowns. Aggressive interest-rate rises from 2022 made mortgage loans much more expensive to roll over, amplifying the sector's problems. Banks that financed commercial property, particularly smaller regional banks, faced severe strain as credit quality deteriorated. Market conditions that combined structural demand shifts and higher financing costs drove distress, but recent developments indicate those acute pressures have subsided, easing refinancing and credit stresses across the sector.
Read at The Economist
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