On March 6, FDIC Chairman Martin Gruenberg spoke at the Institute of International Bankers where he discussed the risks facing banks brought on by macroeconomic uncertainty. In discussing the trends that will likely affect banks’ lending businesses, he specifically addressed the increased credit risk associated with commercial real-estate (CRE) lending. Gruenberg cited the challenge to the office space sector as remote and hybrid work may permanently and materially reduce demand for office space. Measured by loan amounts, CRE and construction and development loans appeared to have grown in 2022. However, on an inflation-adjusted basis, lending in these sectors actually slowed in 2022. The slowing of CRE lending is notable in five major metropolitan areas with vacancy rates between 15-20%, an increase from 9.6% in March 2020.
FDIC Chairman Martin Gruenberg Notes Increased Credit Risk in Commercial Office Space Lending
Published on March 10, 2023
Recent News
WSJ: Strain on Small and Large Banks in the CRE Sector
July 12, 2024
Michael Bright Featured in RealClearMarkets
July 2, 2024