US Commercial Real Estate Faces Looming Economic Threats and Loan Challenges.

The US economy is facing the threat of a commercial real estate market crash as $1.5 trillion in commercial mortgage debt is due by the end of 2025. Steeper borrowing costs, tighter credit conditions, and a decline in property values due to remote work have increased the risk of default. Small and regional banks, which hold about 80% of the sector's outstanding debt, are the biggest source of credit to the $20 trillion commercial real estate market. Office and retail property valuations could ultimately plummet as much as 40% from peak to trough this year as higher interest rates make it harder for investors to refinance trillions in looming debt.