Concerns about New York Community Bancorp (NYCB) and its commercial real estate portfolio has investors re-visiting regional banks' exposure to the beleaguered sector. According to research from Apollo Global Management, Yahoo Finance's parent company, showed that small banks account for 70% of all outstanding commercial real estate loans. If there is trouble in the market, there could potentially be trouble for smaller lenders.
Stijn Van Nieuwerburgh, Columbia Business School Professor of Real Estate, joins Yahoo Finance to discuss fears surrounding real estate as regional banks are showing signs of weakness in the sector.
Nieuwerburgh comments on the impact of remote work on property value for commercial spaces: "Office leases are long-term in nature. Even today there's a lot of tenants serving out their pre-pandemic leases. Over the last four years, a lot of tenants have already reduced their office demand. In a recent survey by CBRE, something like 40% of companies are indicating that they want to cut their office demand even more... by 30% or more in the next three years. This is sort of a train wreck in slow motion. As leases are coming up for renewal, tenants are deciding not to renew them. That causes cash flow issues for the landlords of these buildings and eventually when the mortgage comes due, they may not be able to refinance the mortgage."

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