October 6, 2025 • 4 mins
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The cracks in America’s commercial real estate market are widening fast. With office CMBS delinquency rates at record highs and skyscrapers selling for pennies on the dollar, “extend and pretend” can only delay the inevitable. As small and mid-sized banks sit on mountains of toxic paper, new mergers hint at a brewing crisis. Will taxpayers once again be left holding the bag when this balloon finally pops?
Apple Podcasts: https://podcasts.apple.com/us/podcast/watchdog-on-wall-street-with-chris-markowski/id570687608
Spotify: https://open.spotify.com/show/2PtgPvJvqc2gkpGIkNMR5i
WATCH and SUBSCRIBE on:
https://www.youtube.com/@WatchdogOnWallstreet/featured
The cracks in America’s commercial real estate market are widening fast. With office CMBS delinquency rates at record highs and skyscrapers selling for pennies on the dollar, “extend and pretend” can only delay the inevitable. As small and mid-sized banks sit on mountains of toxic paper, new mergers hint at a brewing crisis. Will taxpayers once again be left holding the bag when this balloon finally pops?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
Extend in for ten rolls on with commercial real estate.
We I haven't talked really about commercial real estate for
some time here, but you know, we've had long discussions
here on the realities of what's taking place on the ground.
Not a matter of if, it's a matter of when
there's going to be a colossal fallout. It is what
(00:39):
it is. They can only and extend and pretend for
so long. That's just the reality. How they end up.
I guess taking the air out of balloon, Popping this balloon.
I don't know. My concerns have always been I don't
want to see another taxpayer bailout for banks and other
(01:01):
you know, various different facilities that are holding all of
this toxic paper, and it's toxic commercial real estate. The
Office CMBs delinquency rates are at eleven point seven percent.
That's the highest level in history. You had an entire
I kid, you not an entire I mean skyscraper in
(01:22):
Denver sell for like a little under four million dollars. Again,
when I talk about commercial real estate in particular, obviously
office real estate companies are not hiring. They're just not
and they are going to be remiss and actually bringing
(01:43):
people back to these high tax areas cities. It's just
not going to work that way that they will move
people elsewhere. What to do? What to do? What to
do with all of this space? I don't know. I
you know, talked about this before here on the program.
(02:05):
Nobody has really come up with much of anything. You know,
many of these these buildings, there's really not much can do.
If you have a building in Manhattan, let's say it's
pre war h office buildings even you know, post to
some degree the size of an entire block. These are
massive office buildings. How do you turn that into an apartment?
(02:32):
I mean you can't really the interior of the building,
all of that interior space. What do you do with that?
Now you're gonna have apartments without windows. You almost have
to carve out the middle of the building to make
it work, or quite frankly, just knocked the whole damn
thing down. I know, there's major concerns about how they're
(03:00):
going about popping this and dealing with reality because again
there's a lot of this paper on a lot of
mid to small sized banks around the country. We just
saw another bank merger today, you know, Fifth Third in
co America, and again they're talking about them is you know,
it's going to be one of the nation's top twenty
(03:21):
banks now after the merger, and they're not even that
big non I go about two hundred eighty eight billion
dollars in assets. Still kind of waiting to see what
the two big defailed banks are going to do. They're
probably kind of like circling right now and waiting to
see and what they'll also wait, because they're smart, they'll
wait for tax payer money to fix the situation so
(03:43):
they don't go out of pocket like last time. Again
that's my fears. I hope it doesn't happen, but at
some point in time we're going to have to deal
with the reality. When it comes to office real office
real estate. Here in the United States, it's in the toilet.
Watchdog on Wall Street dot Com
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
Extend in for ten rolls on with commercial real estate.
We I haven't talked really about commercial real estate for
some time here, but you know, we've had long discussions
here on the realities of what's taking place on the ground.
Not a matter of if, it's a matter of when
there's going to be a colossal fallout. It is what
(00:39):
it is. They can only and extend and pretend for
so long. That's just the reality. How they end up.
I guess taking the air out of balloon, Popping this balloon.
I don't know. My concerns have always been I don't
want to see another taxpayer bailout for banks and other
(01:01):
you know, various different facilities that are holding all of
this toxic paper, and it's toxic commercial real estate. The
Office CMBs delinquency rates are at eleven point seven percent.
That's the highest level in history. You had an entire
I kid, you not an entire I mean skyscraper in
(01:22):
Denver sell for like a little under four million dollars. Again,
when I talk about commercial real estate in particular, obviously
office real estate companies are not hiring. They're just not
and they are going to be remiss and actually bringing
(01:43):
people back to these high tax areas cities. It's just
not going to work that way that they will move
people elsewhere. What to do? What to do? What to
do with all of this space? I don't know. I
you know, talked about this before here on the program.
(02:05):
Nobody has really come up with much of anything. You know,
many of these these buildings, there's really not much can do.
If you have a building in Manhattan, let's say it's
pre war h office buildings even you know, post to
some degree the size of an entire block. These are
massive office buildings. How do you turn that into an apartment?
(02:32):
I mean you can't really the interior of the building,
all of that interior space. What do you do with that?
Now you're gonna have apartments without windows. You almost have
to carve out the middle of the building to make
it work, or quite frankly, just knocked the whole damn
thing down. I know, there's major concerns about how they're
(03:00):
going about popping this and dealing with reality because again
there's a lot of this paper on a lot of
mid to small sized banks around the country. We just
saw another bank merger today, you know, Fifth Third in
co America, and again they're talking about them is you know,
it's going to be one of the nation's top twenty
(03:21):
banks now after the merger, and they're not even that
big non I go about two hundred eighty eight billion
dollars in assets. Still kind of waiting to see what
the two big defailed banks are going to do. They're
probably kind of like circling right now and waiting to
see and what they'll also wait, because they're smart, they'll
wait for tax payer money to fix the situation so
(03:43):
they don't go out of pocket like last time. Again
that's my fears. I hope it doesn't happen, but at
some point in time we're going to have to deal
with the reality. When it comes to office real office
real estate. Here in the United States, it's in the toilet.
Watchdog on Wall Street dot Com
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