Don’t Let Commercial Real Estate Pressures Impact Your Economic Development Goals

This article originally appeared on and was written for Convergent Nonprofit Solutions by Golden Shovel Agency.

The economic landscapes of communities nationwide are as unsettled as ever. One facet of this reality is the state of commercial real estate. Beginning with government-imposed shutdowns and social distancing during the COVID-19 pandemic, businesses and individuals have changed their habits, incorporating remote or hybrid work practices into daily life. As a result, the need for large corporate offices or brick-and-mortar stores has declined. Despite returns toward pre-pandemic norms, the current commercial real estate landscape presents a troubling future. Economic development organizations must account for this potential impact on their communities and be proactive to address the new normal.

Debt and vacancies

Many financial experts exhibit serious concern about the potential impact of the current state of commercial real estate. The Mortgage Bankers Association has reported approximately $1.2 trillion of commercial mortgage debt will mature through 2025. The most troubling is office space, where CommercialEdge indicates nearly $150 billion in mortgages on office buildings are maturing by the end of 2024. Vacancies continue to increase, with the national rate rising to 18.2% in November.

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