The ‘reserves’ are just money they put away for bad loans. All this means is that they’ll have some quarters of lower profits, NOT that they’re going bankrupt.
Perhaps. But my guess is that this ain’t going to be a “few quarters” thing. More people are working remote and we just don’t need commercial office space like we did 5 years ago. Things have radically changed, and many companies are bailing on their leases as soon as they come to the end of their term. And commercial leases are often 3 to 10 years. So people are going to be bailing from those over the rest of this decade. That risk of large loan default could continue to increase.
Yeah, same story for my company and just about all of my friends with white collar jobs. Most offices that lease property are downsizing and consolidating their spaces. Most of the people trying to use their offices are the big tech giants who actually built and own their campuses outright. Everyone else just sees a giant waste of money for very little productivity gains.
Yeah, I don’t disagree that these loans are going to cause trouble for a long time, but I disagree with the headline implying these banks can’t meet their deposits.
I think that, over the next decade, many of these commercial buildings will undergo retrofits (say to turn them into housing) which will help the owners / lenders recoup much of the costs.
The ‘reserves’ are just money they put away for bad loans. All this means is that they’ll have some quarters of lower profits, NOT that they’re going bankrupt.
Perhaps. But my guess is that this ain’t going to be a “few quarters” thing. More people are working remote and we just don’t need commercial office space like we did 5 years ago. Things have radically changed, and many companies are bailing on their leases as soon as they come to the end of their term. And commercial leases are often 3 to 10 years. So people are going to be bailing from those over the rest of this decade. That risk of large loan default could continue to increase.
Bingo. My company sub-leased some downtown office space to get out of it and will bail on it completely in about 5 years when the lease expires.
Yeah, same story for my company and just about all of my friends with white collar jobs. Most offices that lease property are downsizing and consolidating their spaces. Most of the people trying to use their offices are the big tech giants who actually built and own their campuses outright. Everyone else just sees a giant waste of money for very little productivity gains.
Yeah, I don’t disagree that these loans are going to cause trouble for a long time, but I disagree with the headline implying these banks can’t meet their deposits.
I think that, over the next decade, many of these commercial buildings will undergo retrofits (say to turn them into housing) which will help the owners / lenders recoup much of the costs.