Building Stress: Are US Banks Headed for a Commercial Real Estate Reckoning?
Our Privacy Policy has been updated! The Conference Board uses cookies to improve our website, enhance your experience, and deliver relevant messages and offers about our products. Detailed information on the use of cookies on this site is provided in our cookie policy. For more information on how The Conference Board collects and uses personal data, please visit our privacy policy. By continuing to use this Site or by clicking "ACCEPT", you acknowledge our privacy policy and consent to the use of cookies. 

Building Stress: Are US Banks Headed for a Commercial Real Estate Reckoning?

/ Report

Banks are the largest lenders to commercial real estate (CRE) and have grown the business in the past decade. These loans are coming due amid decade-high interest rates and a drop in demand for office space stemming from hybrid work—upending a traditionally lower-risk business for banks. Financial institutions have yet to fully come to terms with their losses; the reckoning is coming.

More on this topic from The Conference Board:

Banks are the largest lenders to commercial real estate (CRE) and have grown the business in the past decade. These loans are coming due amid decade-high interest rates and a drop in demand for office space stemming from hybrid work—upending a traditionally lower-risk business for banks. Financial institutions have yet to fully come to terms with their losses; the reckoning is coming.

More on this topic from The Conference Board:

Trusted Insights for What’s Ahead®™

  • The largest banks, with over $250 billion in assets, are less at risk as they recognized problematic CRE loans, lifted loan loss allowances, possess an ample capital cushion, and do not exhibit concentrated CRE exposure.
  • However, small, midsize, and large banks are vulnerable because they have concentrated exposure, fewer allowances, and less capital to absorb CRE loan losses. These banks, with assets ranging from $100 million to $250 billion, will likely lift CRE charge-offs throughout 2024.
  • Banks, especially those with less than $100 billion in assets, are restricting lending to CRE. While this is reducing the issuance of new CRE loans, tighter lending standards cannot alleviate existing concentrations on bank balance sheets.
  • Companies will experience more restrictive financing conditions as the reckoning unfolds

Author

Kurt Reiman

Kurt Reiman Kurt Reiman

Former Senior Economist, Finance, Risk & Strategy
The Conference Board

Read Bio

This publication is only available to Members. Please sign in to your myTCB® account to access it. To learn more about becoming a Member, click here. To check if your company is a Member, click here

Sign In

Forgot your password

Create An Account

 

Keep my computer signed in

Forgot your password

Create An Account

myTCB® Members get exclusive access to webcasts, publications, data and analysis, plus discounts to events.

Other Related Resources

C-Suite Insights - Stay updated on the biggest issues facing business executives.
ABOUT US
EXPLORE
 
CONTACT US
CAREERS