Distress is mounting for U.S. commodity offices

- Tenants’ preference for high quality or less costly offices — which has been intensified by current conditions — is applying pressure on commodity Class A landlords.
- Landlords exposed to commodity assets may need to stretch their underwriting assumptions to capture tenant commitments by offering more compelling lease economics and/or reinvesting in these assets, which are challenging propositions from a lenders’ perspective.
- Active tenant requirements focused on these potentially compelling opportunities, especially in a supply-rich market environment, should perform due diligence to ensure their landlords are positioned to remain solvent.
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