"Rising Systemic Risk: Commercial Real Estate Woes Threaten Financial Stability"

Fund managers are increasingly concerned that trouble in the commercial real estate sector could lead to a credit crisis in the U.S., with the potential for a systemic credit event identified as a top risk to markets. About $1.5 trillion in commercial mortgage debt is due by the end of 2025, and steeper borrowing costs, tighter credit conditions, and declining property values due to remote work have increased the risk of default. Small and regional banks, which hold about 80% of the sector's outstanding debt, are at the center of the potential upheaval, with concerns that lending standards could become significantly more restrictive. Treasury Secretary Janet Yellen has downplayed the potential impact on the banking system, stating that while there may be additional bank stress and financial losses, it is not expected to pose a systemic risk.