Real Estate

The next big potential risk to the US economy could be lurking in the corporate towers of inner-city districts.
With many people still working from home, companies are cutting back on office space so much that it threatens to unleash even more foreclosure headwinds,” says Kenneth Rosen, president of the real estate research firm Rosen Consulting Group.
Banks will feel the impact too.The rise in defaults and foreclosures will likely send tremors through the US banking system.
Most of the $1.2 trillion of office space debt is owed to smaller regional banks, which are already in crisis due to depositor flights to larger banks. In the last two months, three smaller banks have failed. That problem has continued to fester as PacWest Bancorp shares took a hit last week. If office owners can’t meet their loans and eventually hand over the keys, banks will need to find new buyers, a difficult task when interest rates are high, credit is tightening and worries about the economy are growing.
All this has captured the attention of those responsible for it will be: The next big potential risk to the US economy could be looming in the corporate towers in the country’s central districts.