The Corporate Bond Market Debt Bubble

The Covid-19 pandemic has thrown many things in our lives upside down. Work and employment has definitely changed. People locked in service jobs have moved onto to other things leaving restaurants, hotels, and even fast food desperate for workers. For white collar office workers, many have been sent home to work-from-home and this has left downtown office spaces empty of workers. Companies like Microsoft have announced that they will let employees work from home indefinitely. Twitter was the first to tell employees that they could stay at home forever. These new policies have wide-ranging implications for commercial real estate. Restaurants have bars have closed up shop leaving those spaces open and companies often will be lowering their footprint or not paying rent. Much like how residential mortgages are packaged together and sold to investors, commercial real estate leases are packaged in a similar fashion. So what happens when these buildings are left empty and there is not one to lease them?

In this video we find out about the coming commercial real estate debt bubble. When there’s no one paying rent in commercial buildings, the debt those rents were meant to support becomes toxic. This is a huge problem that only a few people are talking about and the collapse of commercial real estate debt could effect the entire economy.