There are 1 billion square feet of unoccupied #office space in the US. That is almost 3 square feet for every person in the country. If you were to put all unoccupied space in one single building with 20,000 sqf floor area and 11 feet of height, the building would have 48,125 floors. The national average monthly rent for office space is $38.36/month, which means there is a hole in the sector’s cash flow of almost half a Trillion dollars, or about 2% of gdp. If we asume that the average loan to value is 50%, around $250bn dollars of debt do not have cash flow coverage. A big part of that debt sits on banks balance sheets. How long will it take for the mortgage debt associated with those buildings to get in trouble and ultimately default? And what would be the impact on the banking sector? Every 25 bps increase in fed funds count.
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Chart source: visual capitalist.
