Could Real Estate Again Trigger a Financial Crisis?

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Changing work patterns in the United States could have severe consequences for global markets.

By Cameron Abadi, a deputy editor at Foreign Policy, and Adam Tooze, a columnist at Foreign Policy and director of the European Institute at Columbia University. Sign up for Adam’s Chartbook newsletter here.

A teenager is shown from behind as a silhouetted figure as he looks out at Manhattan from a window at the top of One World Trade Center. His hand is raised at a right angle with his fingers pressed against the glass. The New York City skyline is visible through the glass beneath a cloudy sky.

A teenager looks out at Manhattan from the top of One World Trade Center in New York City on July 24, 2018. Spencer Platt/Getty Images

The value of commercial real estate in the United States has declined by 11 percent since March 2022. The immediate cause of that price drop was an increase in interest rates initiated by the Federal Reserve. COVID-19 lockdowns, the rise of working from home, and e-commerce also affected the public’s relationship to commercial real estate in a more direct way. The result is a potential financial crisis as the loans on those commercial properties threaten to go delinquent.

Cameron Abadi is a deputy editor at Foreign Policy. Twitter: @CameronAbadi

Adam Tooze is a columnist at Foreign Policy and a history professor and the director of the European Institute at Columbia University. He is the author of Chartbook, a newsletter on economics, geopolitics, and history. Twitter: @adam_tooze