Financial TimesFinancial Times

European commercial real estate: The cracks are starting to show

By Joshua Oliver

10 Apr 2023 · 9 min read

Editor's Note

In Europe, office buildings alone are backed by €1.5 trillion of debt. As commercial property owners face increased borrowing costs, the FT asks whether the changes could lead to a sector-wide crisis.

From Canary Wharf in London to La Défense in Paris and Frankfurt’s Bankenviertel, the logos of major banks adorn Europe’s grandest office buildings. But there is early evidence that these buildings could become liabilities for banks and investors as they are buffeted by rising costs and post-Covid workplace changes.

Offices are the largest component of a commercial property market which lenders and investors have backed with €1.5tn of debt in Europe alone. About €310bn of new or replacement borrowing is issued to keep the market moving in a typical year, according to Bayes Business School at City, University of London.

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