Orange County, CA Correspondent — Not for the office segment, and the numbers are now firm enough to say it without hedging.

Office values are down somewhere between thirty and forty percent from the peak in most major markets, and considerably more for older buildings without amenities. Occupancy nationally has plateaued near half of pre-pandemic levels for over a year.

The financing model assumed stable occupancy and easy refinancing at low rates, and both assumptions are gone simultaneously.

The maturity wall is the mechanism. Something like a trillion and a half in commercial mortgages comes due over the next two years, much of it written when money was free, and the arithmetic on a refinancing at current rates against a lower appraisal frequently doesn’t work at any equity contribution the owner will make.

Clermont, FL Correspondent — Financing rested on reliable occupancy and stable values, and hybrid work broke that for large segments of office.

It remains viable for what still matches demand — industrial, residential, well-located mixed use. Florida’s office market is healthier than most because people moved here, which is a local exception rather than a refutation.

Pretending the old model works delays recognition of losses, and delayed recognition is the thing that turns a manageable repricing into a slow crisis.

Novi, MI Correspondent — Lower demand and higher rates don’t support the old assumptions and the adjustment is required.

The industrial side of the market is the opposite story and it’s worth saying, because “commercial real estate” is being discussed as one asset class and it’s several.

Warehouse and manufacturing space is tight, rents are up, and we can’t find the buildings we need. Office is in distress and industrial is in shortage, in the same country and often the same metro.

Gastonia, NC Correspondent — Empty office space and higher rates break the old arithmetic and a lot of those loans get reworked.

What I’d watch is where the loans are. A disproportionate share of this exposure sits at regional and community banks rather than at the largest institutions, because the big ones were pushed out of it by capital rules after 2008.

So a policy designed to concentrate risk away from systemically important banks concentrated it somewhere with less capital and less supervision. That’s worth remembering before anybody writes the next set of rules.

Long Island, NY Correspondent — A model assuming five days of badge swipes isn’t viable for a slice of the stock.

Let the repricing happen. Change the code so a floor can become a home or a laboratory. Mark the dead portion as dead, because dead is a vacancy rate rather than a slur.

The legal obstacle to conversion that nobody mentions is the capital stack. A building with a mortgage, a mezzanine lender, and a ground lease requires every party to agree before a use changes, and any one of them can hold out for a better recovery.

That’s why conversions announced two years ago haven’t started. It isn’t zoning. It’s that nobody can assemble a consent.

Las Vegas, NV Correspondent — Rooms need bodies and offices that were a habit don’t.

Split the book. The habit portion needs a new use or a new owner at a new price.

Public subsidy to maintain the old rent is a museum, and museums don’t service a mortgage.

Knoxville, TN Correspondent — Downtown lunch already told you.

Financing that ignores it fails in public, and failure can be orderly if the use can change. Make the use legal.

The municipal exposure is the piece that reaches my desk. Office assessments falling by a third moves the property tax base, and cities that built budgets on downtown valuations are discovering it a year at a time as reassessments cycle through.

That’s a slow-motion fiscal problem in a dozen large cities and none of them have a plan.

Dayton, OH Correspondent — Our downtown emptied before any of this so we’re a preview rather than a casualty.

What I’d say is that the recovery, where it happened, came from residential conversion and took fifteen years. Nobody wants to hear that.

The buildings that convert well are older ones with small floor plates and operable windows. The 1980s towers with a hundred feet from window to core are the hardest to convert and the most distressed, which is an unfortunate coincidence.

Owatonna, MN Correspondent — The financial history rhymes and it’s worth noting which one.

This resembles the savings and loan period more than 2008 — a slow accumulation of losses on assets held by many small institutions, recognized gradually, resolved over years.

That took most of a decade and cost real money and did not become a systemic event. It also closed a great many banks and reshaped a lending market permanently.

That’s the likelier path here and it’s neither the catastrophe nor the non-event the two camps predict.

Jacksonville, FL Correspondent — Ports care about industrial and we’re short of it, so the distress is somebody else’s.

The city version is a downtown that never recovered from the last thing and now has a further problem.

What I’d note is that municipal debt is priced against a tax base, and a base that shifts from commercial toward residential also shifts who pays. That’s a political event dressed as an accounting adjustment.

Myrtle Beach, SC Correspondent — Not our problem in the office sense and very much our problem in the hospitality sense.

Hotel financing has the same maturity issue with a different demand story. Ours is fine. Business-travel-dependent properties in cities are not, and they’re being refinanced against a segment that hasn’t returned and may not.

Sydney, Australia Correspondent — Our version is milder and the reason is instructive.

Return-to-office here recovered further than in American cities, partly because commutes are shorter and partly because employers simply required it earlier and with less negotiation.

So the demand shift isn’t a law of the technology. It’s substantially a labor-market outcome, and yours reflects a tighter market and a more remote-capable workforce.

If your labor market loosens, some of this reverses. That’s not a forecast — it’s a reason to be careful about the word permanent in the question.