Meanwhile, security delinquencies as a result of commercial mortgages are expected to rise as more people become unable to pay back such loans, as reported by Fitch Ratings. The delinquency rate is projected to hit 4.5% in 2024, then rise to 4.9% in 2025. In November of 2023, the rate was just 2.25%.

As a result of being unable to pay back such loans, several developers and property firms have had no other option but to fold. In December, the mortgage real estate investment trust JER Investors filed for bankruptcy. A month prior, the start-up company WeWork, which was once valued at $47 billion and offered flexible workspace for rent, also filed for bankruptcy.

[The writing was on the wall for the commercial property industry before the pandemic, but that really accelerated during the shutdowns and the access restrictions. Remote work became the norm, and while it’s sub-optimal in the long run, it will be tough to find people who are willing to work in a traditional 9-5 environment from now on. Anyone carrying bonds in commercial properties had better start rethinking their investment profiles. — Ed]