If U.S. banks absorb big losses on their $2 trillion in commercial real estate loans, the entire economy will suffer. Banks have repeatedly failed after stumbling into big losses on commercial real estate loans, from the savings-and-loan crisis of the 1980s to the Great Recession in 2008. U.S. banks lost $110 billion on commercial real estate in the last financial crisis, at least one-quarter of their total losses, according to Oxford Economics. Office space, the largest single slice of the commercial real estate sector, already is seeing rents fall as vacancies rise. “I don’t see any way of avoiding a great deal of pain in the commercial real estate market in 2021.
