End of the Corporate Office? Economic Collapse on the Horizon

Economic trends aren’t smiling favorably on landlords in the real estate business, particularly when it comes to corporate offices.

Interest-only loans increased to 88%. They were at 51% just a decade ago.

Translation? Banks are giving out mortgage loans like it’s Freddie Mack and Fannie May’s 1998.

In the wake of the 2008 recession, commercial loans and mortgages exploded. This did help general US industry keep the economy afloat. Despite a downturn in investments, new properties were able to be built, both residential and commercial. Developments could get greenlighted to help revitalize downtown, that hot new real estate project projected to finish as their town gets hipper and hipper would get the go-ahead.

But now, the bill is due, and another economic crisis may be on the horizon.

Over the next three years, $1.3 trillion is due to be paid back.

The current mortgages won’t be able to get refinanced due to interest rates remaining at a low level.

Office landlords face a historically high chance of default.

Xiaojing Li, who does risk analytics at a key data company, told ZeroHedge that 83% of office loans won’t be able to refinance at the current interest rate level.

First there was the bank collapse, then the housing collapse, think of this as the office collapse. And this comes at a time when more and more people are working from home.

The domino effect is in full swing.