We Have a Commercial Real Estate Crisis
2 Video Views·Mar 9, 2026
Carlyle Group Co-Founder & Co-Chairman David Rubenstein breaks down the grim situation facing the office real estate landscape as investors juggle rising interest rates and upcoming loan payments. This animation is featured in "Bloomberg Wealth with David Rubenstein" with guest Barry Sternlicht, recorded June 28th in New York.
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The market for office real estate remains in a state of disrepair. The popularity of hybrid work combined with a recent wave of layoffs has sent demand for office space plunging and vacancy rates are on the rise.
In the first quarter of 2023, 12.9 percent of office space in the U.S. sat vacant, according to data from CoStar Group. That's an all time high.
McKinsey estimates that the shift to work from home could wipe out 800 billion dollars from the value of global office buildings in major cities by 2030.
And for investors in these office towers, the old playbook isn't working. Those deals were largely fueled by easy access to cheap debt and skyrocketing interest rates makes it harder and more expensive to refinance.
Now, those loans are coming due. Roughly 1.4 trillion dollars worth between 2023 and 2024, according to the Mortgage Bankers Association.
There are signs of promise amid the grim outlook, though. According to real estate firm Jones Lang LaSalle, office leasing rebounded 7.7 percent from the first to second quarter this year.
However, those gains are still well below the pre-pandemic average.