Inside the office debt timebomb: Commercial real estate teeters on the edge of financial meltdown as ‘zombie’ spaces dominate areas like San Fran and Manhattan – with owners set to default on billion-dollar loans this year

Commercial real estate has become a debt timebomb, experts have warned, as office towers remain empty in once-bustling cities.

The new era of remote work means ‘zombie’ workspaces remain vacant – while higher interest rates make it more expensive to buy or refinance buildings.

Some $1.5trillion in real estate mortgages are due this year and next, bringing the market to a dangerous precipice. When the deadline arrives, experts warn owners may be forced to default instead of borrowing again to cover the bill.

Earlier this month, the landlords of downtown San Francisco’s Westfield mall stopped making mortgage payments on its $558million loan amid rising crime and tanking sales.

Meanwhile in New York, building owners are being forced to negotiate extensions on millions of dollars of debt after failing to secure financing.

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