It’s the older office towers that get in trouble amid a flight to quality.
By Wolf Richter for WOLF STREET.
The delinquency rate of office mortgages that have been securitized into commercial mortgage-backed securities (CMBS) re-spiked by 83 basis points in May and April and at the end of May reached 10.6%, the third highest ever, just below the record in December 2024 and a hair below the two previous records during the Financial Crisis (10.7%), according to data by Trepp, which tracks and analyzes CMBS.
Since the beginning of 2023, the delinquency rate for office CMBS has spiked by 9 full percentage points. The office sector of commercial real estate has been in a depression for over two years, despite over a year of industry pronouncements that “the worst is behind us.”
More and more landlords have stopped making interest payments on their mortgages amid historic vacancy rates across the US because they don’t collect enough in rents to pay interest and other costs, and they can’t refinance maturing loans because the building doesn’t generate enough in rents to cover interest and other costs, and they cannot get out from under the building by selling it because prices of older office towers collapsed by 50%, 60%, 70%, or more.
There has been a lot of extend-and-pretend where landlords and lenders tried to just outwait the problem by extending and modifying the existing mortgage that went into default or was on the verge of default – under the motto, “survive till 2025” – with everyone hoping for much lower interest rates, and a sudden resurgence of demand for offices, both of which have remained elusive.
It’s this extend-and-pretend that has caused the CRE problems to get dragged into 2025. And the cleanup that involves recognizing big losses for investors and lenders (such as CMBS holders) has been slow.
Mortgages count as delinquent when the landlord fails to make the interest payment after the 30-day grace period. A mortgage doesn’t count as delinquent if the landlord continues to make the interest payment but fails to pay off the mortgage when it matures, which constitutes a repayment default. If repayment defaults by a borrower who is current on interest were included, the delinquency rate would be higher still.
Loans are pulled off the delinquency list when the interest gets paid, or when the loan is resolved through a foreclosure sale, generally involving big losses for the CMBS holders, or if a deal gets worked out between landlord and the special servicer that represents the CMBS holders, such as the mortgage being restructured or modified and extended.
It’s the older office towers that get in trouble. High vacancy rates in the latest and greatest buildings allow companies to move from an old office tower to a fancy newer tower, while downsizing at the same time, and this “flight to quality” is speeding up the demise of the older towers.
The two fundamental problems are a glut of unused offices – a structural problem that won’t easily go away – and the much higher interest rates.
In Q1, the office vacancy rate across the country worsened to a record 22.6%, according to JLL. In San Francisco, once the hottest office market in the US and now the epicenter of working from home, the availability rate of office space on the market for lease – including X Corporation’s former headquarters building – was 35.6% in Q1, according to Savills. It has been over 35% for nearly two years, despite hot demand from AI-anything.
Making the problem worse is that these office towers that back CMBS were cash-out refinanced a few years ago at super-low interest rates, amid low vacancy rates and delusional collateral values. When those loans get resolved, losses are huge and have reached the top-rated CMBS slices, with the lower-rated slices getting wiped out.
In terms of selling office buildings, that market has thawed, but at huge discounts. In San Francisco, the discounts run between about 60% and 70%-plus from pre-pandemic prices. There have been a number of transactions in that range in 2024 and so far in 2025, after having been solidly frozen. Now everyone knows what the parameters are, and deals are happening. And that’s a good thing.
A sale – including a foreclosure sale – allows new investors with a much lower cost basis to do something with the tower. The spectrum of what to do with it ranges from tearing it down and redeveloping the land to converting it into high-end condos or apartments.
Not many towers are suitable for residential conversion, but they’re happening. According to estimates by Moody’s, there are now 71 million square feet of conversions planned or under way, but that’s just 7.9% of the total vacant office space.
Who is on the hook? A big part of office mortgages is spread across investors – not banks – around the world via office CMBS and CLOs that are held by bond funds, insurers, private or publicly traded office REITs and mortgage REITS. PE firms, private credit firms, and other investment vehicles, all are exposed to office CRE loans.
Banks hold only a portion of office CRE loans. Many have disclosed write-downs that have dented their earnings, and their shares dropped. And some of those banks have been foreign banks. Maybe some smaller banks will choke on their office debt someday, but that hasn’t happened yet.
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In Sacramento this is apparent and after the governor was pro telework he is now mandating RTO 4 days a week. Anything more than 2 requires getting new leases as massive downsizing was done in the years after COVID. Given RTO isn’t about productivity we all assume it is about money and repaying real estate investors who got him elected. Reality of course it will help them out but of course significantly reduce disposable income from those returning to office. This is also time with significant parking fee increases. It certainly won’t get him votes for 2028 Presidential campaign but not exactly a popular governor here.
A coworker of mine calls him Governor Gruesome. LOL
Well we can measure the success of President Trump’s project too not only reinstate America’s status ala 1950. A common malady among aging humans who’s mental capacities are declining at a rate correlated with the merciless physical decline that comes with getting old.
As repatriated companies, like Apple, manufacture their product in the good old USA, thus generating a tidal wave of demand for workers in a historically snug employment scenario. The only way to attain the AI objective is to utilize the taco defense, and invite them all back, just kidding.
If Apple ever assembles iPhones or computers in the US, it will not be with labor. It can only happen with automation. That will take massive investment, but Apple will find it cheaper to bribe (AKA lobby) for exemptions than invest in the hard work of production.
Perhaps if they had taken the 98 billion they had borrowed by 2022 and turned it into investment in plant, equipment and R&D rather than stock buy backs, other returns to shareholders and fabulous corporate offices, they would not be facing the conundrum they face now. But Tim Cook’s huge paycheck was no doubt structured around the very strategy he pursued – Financial engineering to enrich those who control Apple rather than the long term future of the company.
If Trump persists (an I hope he does), the cost will come home to roost. Higher interest rates are already forcing Apple to divert cash to repayment of debt (down to 78 billion in 2025) which might be better spent trying to gain control of their supply chain.
Not quite.
Where for example Intel just borrowed to do share buy backs Apples strategy is different.
They are using the profit that is stashed overseas to payoff the loans.
Why? The cost of a loan is less then what Apple would have to pay the US in taxes.
The governor here in MN had a similar RTO mandate because downtown St. Paul wasn’t getting enough traffic.
Many years ago, the first time I was in MSP next to the Mary Tyler Moore statue I spun around and threw my hat up in the air.
Did some digging into RTO in California. The lieutenant governor who will be running when Newsoms term expires has massive real estate holdings in the area, and not even in a blind trust, like that would matter. Nothing like RTO to reduce vacancies and drive up rates. As a governor she would even be signing off on specific leases. Honestly not unexpected but it is amazing how corrupt the ruling class is. I am sure quid pro quo when Newsom runs for President with fund raising and so on.
Its clear as day that the ‘people’ running Imperial Amerika are going to drive this “system” like it’s a stolen car and they are being chased by the police.
They have a story for why everything will be fine, the dollar will always be #1, etc, etc – just the same as the emotional click baiters have a story for why tomorrow is the last day until it all collapses.
Its impossible to be too cynical. You actually can’t be cynical enough in today’s world.
We live in a fact free world now so any narrative seems to work. That combined with the perpetuation of myths, for example, that we manufacture in China because of low cost labor. That was true once but if low cost labor is the goal China is not the place. It is a large skilled labor force with high utilization of technology. Funny to imagine bringing an iPhone factory to the US from a labor perspective, not to mention the 1000 supply chain reasons. Not sure America can break the cycle of blame that occurs rather than some introspection and same policies for a world in the midst of a massive economic transformation.
BS. Apple is full of propaganda shit on this to cover up the real reason it manufactures US-marketed iPhones overseas: it invoices them through Ireland, and then keeps its profits in Ireland as it sells the devices in the US at nearly no profit so that its income in the US from sales of those devices in the US is near zero, and it doesn’t pay income taxes on its sales of those devices in the US. That’s why. A Senate investigation over 10 years ago already pointed that out. The rest is cover-up bullshit propaganda. I cannot believe that people believe this shit that Apple puts out there directly and indirectly through its vast propaganda machine.
The US is the second largest manufacturing country in the world by value added, and bigger than the next three combined. You can manufacture ANYTHING in the US if there is a will.
Apple built a factory in India for its US-bound iPhones. It should have built that factory in the US. But then it would have to pay income taxes on its US profits lol
Tariffs will force Apple to pay taxes in the US.
Exactly, Many companies book profitable in Ireland and book expenses here in the USA, tax invasion! Ireland has a 12% corporate tax rate and we are inverted at 21% corporate tax rate. Past presidents talked about tax repatriation or tax holidays to bring money back home. It’s all giant shell game that allows these big companies to buy back shares with free money, to keep the bull market going at any cost! The day of reckoning is coming!!! Ha. Maybe a transition of reckoning instead of a day. Unless we get level 3 circuit breaker tripping. We will see one day at time we will see what happens
Mine isn’t based on propaganda as it the American way for corporations to avoid paying taxes and government says it is bad but really does nothing. My point is iPhones won’t be made here. AI servers in Texas, sure, as servers and server farms can be more enforced via chip regulations as well as concerns around data. Sure, the US market share for iPhones is 57% but that share will decline over time given we are 4.5% of the world population. Foxxconn employee over 200K employees and on India iPhone companies employee 77K. So if we shift all iPhone production(50% of market share) for US consumers that is going to require massive investment and perhaps 100K employees. We are a consumer economy that could never produce what we need. Perhaps production could be related to final assembly instead of global supply chain but does it make sense to ship all that here, with tariffs, to simply solder and screw and do final packaging? Makes more sense for the American government hold American corporations accountable but hard to do given how elections are funded. I won’t eat my shoe if iPhones are made here but will buy rounds and eat humble pie!
One of the propaganda articles recently mentioned that the reason Apple manufactures in China is that the Chinese workers have small hands, which allows them to work with the small delicate parts in the iPhone. Apparently Americans fingers are too fat.
Big Daddy A
LOL. Such stupid BS. Don’t ever go back to that idiotic publication. The Asian and Chinese-American population in the US is significant, if Apple wants to hire Asians or Chinese, it could. In fact, it already has lots of Chinese-American and Asian-American people on its payroll in the US. My ballot here (for citizens!) is trilingual: Cantonese, Spanish, and English. Every major US city has a China Town. There are Asians and Chinese Americans everywhere in the US. About 5 million people in the US self-identify as Chinese or Chinese combined with another race.
AI, as shitty as it is, can do no worse than humans when it comes to publishing propaganda bullshit.
Very good point which I always forget about. I used to work in the Treasury group at Apple. We worked very hard, in close collaboration with the Tax people and other corporate finance types to manage the profits that appeared in the US. As part of that effort we ran a very large FX hedging operation which was pretty interesting in itself.
Apple is a marketing and financial operation – they have been living off an a software/engineering legacy that is about exhausted. No really good engineer will stay at apple for any length of time – of course thats just my own opinion.
It was a once upon a time a thing where every ~10 years congress would have a tax repatriation amnesty for Corporate America. Corps keep cash overseas and then eventually move it back at much reduced rates. Just have to wait for the money pile to be big enough to the reduced tax rate can be sold to the citizen as a tax windfall.
As the world has financialized more and more, cash in the EU is pretty much as good as cash in the USA with all the repo/collatoral credit arrangements in place. I was expecting Trump to float this possibility again, but perhaps it’s no longer necessary.
Congress could of course pass an incentive law. E.g., +1% per year from the base rate for every year foreign earnings are not repatriated, but I guess that would get figured out too.
I’d say Apple could spend a few billion to engineer labor saving designs to manufacture iPhones in the USA with fewer employees, but all their engineers are in India. Heh.
Which, I agree, that Harvard has done at the least, as much havoc as the dispensing of wisdom, which they pride themselves. The ignorance is more profound.
A bought and payed for Supreme Court graduates that destroyed any chance for democracy in America with the profoundly defective Citizens United decision, itself tainted with bribes.
The equivalence between the poor and the rich is per se obvious and contrary to, if not the letter, then the intent of the Americans that drafted the Constitution.
Dang:
To your point, I believe there’s plenty of legislation on the books that is contrary to the letter of the Constitution also.
It is chuckle-worthy when I see comments like “that’s why you need to get out, vote and write a letter to your congressman!”
The systemic issues of the “deep state” are well known. I can’t elect a supreme court justice, and my congressperson even has relatively no power (what chance do I have?!?)
The snowball effect is real. The “tax code” is at least a 2600 page document… with 10s of thousands of pages of related material. Each legislation passed is similarly bloated and stuffed with unrelated malarkey, tied to anything useful.
Contrast that with the 4-page constitution.
Rube Goldberg would be impressed with this level of complexity induced stagnation!
There are other factors as play with these large office buildings. Namely the decline of our large cities, exterior/HVAC maintenance (on the roof in many cases), high energy costs (can’t open the window), etc.
Companies are moving to newer buildings/corporate campuses outside of the inner city. These buildings are smaller, 3 or 4 stories and much more sustainable.
Wait until one of these behemouths has to be taken down! Wonder who’s going to pay for that.
indubitably, the tax base of course.
Current negotiations with the City of Detroit, Wayne County, and State of Michigan are up to 1.2B to pay GM to take down 2 of the 7 towers of the renaissance center aka GM HQ.
1.2B to remove 2 50 floor buildings only to create more “riverfront” walk-able space. No new tower, just infrastructure and more boardwalk; in a city where no one walks.
Maybe nobody walks there because it sucks. I was just in Chicago and their waterfront is amazing.
$1.2B is a lot but might be worth the investment. The residential towers that Chicago has on the lakefront are clearly worth billions of dollars.
Maybe nobody walks there because of the high crime rate in the city of Detroit from robberies to homicides.
Funny, I keep reading the same thing about Chicago. Didn’t have any issue walking back from the AC/DC concert at 11 pm with my family.
That’s a circular argument.
Comparing Chicago and the D is apples and oranges.
One is a world class city, the other is the hollowed out carcass of 20th century industry, racial animus and neglect.
City of Detroit still has over 300k vacant structures, over half of all homes and buildings. Only Cleveland comes close at ~30% vacant.
As for crime, most of Chicago’s major crime occurs south of 110th and is gang related.
No sane person would dare walk with their family anywhere in the D after dark, even downtown.
From the venue to the parking garage to the highway back to the burbs. That’s it. Dont stop for gas either.
To MotorcityMadman –
CWB Chicago site reports crime exclusively in Downtown (including South Loop) and North Side Chicago.
Yes, spent enough time in Detroit and near surrounds to agree with you there.
Kinda ironic that if I ever visited that way again it would be to Greenfield Village / The Henry Ford (Dearborn) and the old car show weekend on Woodward, both harken back to the better days of the time long past.
I recently saw that Detroit rates very high in housing affordability for US cities.
It made me think of comments I have seen about people just “needing to someplace reasonable to live.”
If the price is right, wages are questionable and standard of living is dismal, the equation doesn’t equate!
Wonder if the mental giants running the City of Detroit have figured out how much more tax money will flow from yet another riverfront boardwalk that no one but the odd fisherman uses except for TV reporters doing a “city revival” report. Ugh, this gives me a headache.
we watched some open wheel racing from Detroit yesterday and remarks were made about that downtown, those GM buildings and the waterfront from both sides of the river. There is a contrast.
Mike’s concern about the cost to demolish large office buildings also occurred to me, in part because of the difficulty in repurposing these buildings to residential or other uses. I did a simple Google search and discovered that there are several posts by demolition companies or services that offer referrals to demolition companies. A few sites cite numbers from 2023-2024. The cost per square foot is variable depending on multiple factors such as whether there is asbestos or other hazardous material present. A general figure is $4-$8 per sq. ft. but is around $10 per sq. ft. for high rise buildings. Repurposing for example as in removing internal walls for residential conversion is called internal demolition. Cited costs are $2-$4 per sq. ft.
Thanks for this followup comment; very insightful. I think these older towers will decline just like the malls of America. Personal observation of one near my parent’s home in central Florida….kept selling at lower and lower prices over a span of a decade. Each new buyer had great plans/dreams, but never worked out. Each sale the buyer takes a loss and hands off to someone else. That’s how I see these old towers fading. And I predict you will see many of these being turned over to the city for eventual demolition. I mean, if you go into bankruptcy how can the city force you to demolish. This is pretty much what happened with all these contaminated industrial sites around the country (EPA superfund). Only this go around, with the demise of the dollar, the government won’t have the money.
There is obviously a crisis in the CRM. No one wants to own a trophy building just now. I’m pretty sure there are more savvy players, who like me, are looking to spend my cash, currently tied up in short term US treasuries. Not
Going to the office was fun. So many other people in the same boat. Maybe it will come back.
In a lot of ways, the true toxicity lies in a system that allows rotting loans to “extend and pretend” to a point where collapse is inevitable – rather than something closer to a “mark to market” model where the rot gets revealed over time.
Those moonshot upward slopes on delinquency/default charts serve no one’s interest other than incumbent owners/lenders – trying to cover things up in hope of finding ignorant bagholders to take over.
The scary part is that this “fake it til you make it…out” mentality permeates every asset class – everything looks “fine” until the nuke explodes.
Got gold and silver?
For what?
Collateral is one thing that comes to mind, but since you don’t gold has any role in modern finance and has no value, then please send me all the gold you don’t want!
LMFAO!!!!!
Of course that the magic of financial control of the financial statements rather the the accountants. Extend and pretend is actually the basic strategy of every single 18 year old America. I remember my 18th birthday which made me eligible for the selective service system, the draft.
There are extraordinary lengths the government will exercise before they will let the rotten loans default. They already covered the gambling losses for the otherwise bankrupt Wall Street commercial banking system.
As an old fellow traveler I recommend not wasting your passions on things you should be aware of but are helpless to change the outcome.
I hear what you are saying, but it is a rather simple thing to simply publicize the fact that a lot of rotten asset markets can “look fine” for a period of time – but really have horrible/dangerous fundamentals underneath.
By pointing that out and making it more widely known, some of the toxic over-valuation gets drawn out of the system.
Take the latest idiocy – the pandemic housing boom (1 million dead, of course prices will double!).
Truly stupid…but very likely constrained *somewhat* by the recent memory of housing implosion 1.0 (“Golly, maybe 1 million dead isn’t a buy signal and home price doubling doesn’t make a lot of sense’).
Ditto with the PE ratios of “Magnificent 7″…
Independent RTO metrics reinforce these findings. Kastle Systems uses a model that relies on office ID badge swipes and placer.ai uses cellphone network geolocation data and both show basically the same data… For all office classes, RTO shot back from about 15% occupancy (compared to prepandemic) at the beginning of the pandemic to about 47% in fall 2022. Since then it has only gone up by about 7 basis points. Both outfits break down their stats by the class-A fancy office buildings vs. all the rest and as Wolf indicates, the class-A’s are doing much better at around 70-75% prepandemic occupancy.
The key stat to remember though is that after the initial spurt and despite all the hoopla you hear about in the media about RTO, since fall 2022 office occupancy has been recovering very slowly, increasing only about 2% per year (remember too that there is natural population growth at this time contributing to this). This rate of recovery is far too slow to save the office market, especially as far as the older office buildings are concerned.
If corporate profit margins decrease from extended levels, I wonder if that puts more pressure on companies to increase productivity with RTO. I believe WFH is an employee perk that could go away in hard times.
Does RTO increase productivity ?
I have a feeling workers are equally
as unproductive at home as they are
in the office. BTW, will AI make
returning to the office a moot point
anyway ?
@Sporkfed Some people need smeone looking over their sholder to get them to work. For those people RTO increases productivity, but others will do the work anywhere without a manager checking in. The answer to your question (like so many other questions is ‘it depends”…
Sporkfed,
It depends on the job obviously but from my perspective I would just like critical thinking and data to drive the decision. My experience is that is often not the case. If I go into the office I am simply working on my laptop or in a Teams meeting. No different than home other than more expenses, less flexibility and wanting to be less productive just to stick it to the man. Every couple of months we go out as a team just to connect in the flesh. COVID sucked but it was an evolution too like the Haymarket riots.
The office environment was toxic similar to every day life which was fun. People need other people.
I’m not waiting for a lady, I’m just waiting for a friend.
A lot of people seem to speculate all sorts of things about RTO, but if you look at the actual, on the ground, verifiable metrics the pattern has been remarkably consistent for years now. Once you smooth out for seasonal fluctuations the recovery trend was an increase of about 7 basis points/yr to fall 2022 and ~2 basis points/year since. I suspect this is what we’ll continue to see for the foreseeable future.
Where things get more confounding is when you bring hybrid arrangements into the mix… Kastle all-office-class RTO index sits at 53% prepandemic, but its peak-day is 62%. There is also significant regional variation, with San Francisco’s all-office index at about 42% and Houston at 63%.
At least the way I am reading the Kastle stats (maybe I’m wrong) the current work-in-office number still seem incredibly low (cp pre-pandemic).
To the point that you have to wonder about all the alleged net hiring from 2022-yesterday.
On the one hand, you have incredibly low Kastle check-ins – on the other millions and millions of claimed net new hires.
Is some astronomical number of net new hires working remotely? Despite the RTO stories?
And lets talk about CMBS collapse (consistent with Kastle’s crappy numbers…not so much with millions and millions of net new hires…unless they are massively working from home).
Furthermor, the “natural population growth” is probably a population segment unlikely to be using office space.
Purportedly, AI is about to make the RTO metrics, not just irrelevant, but an electronically generated metric that signals to the posers to make a losing bet. The CRE is outdated, even if there were a white knight with karisma able to make a spore of CRE attractive.
There are some structures that deserve respect, as they fall apart. That’s life!
Hi,
Low prices are great. But without new industrial parks and goods producing projects are introduced into the economy, the rents/loans money cycle will arise to create another crisis, I think.
Collateral risk will be in vogue again. Smart people are talking about the banks don’t own risk directly but accepted risky collateral of all kinds to be used for collateral for loans. Essentially banks are once removed from risk, but if they have to call the collateral. Houston we have a problem. Some buyers of CMBS and CLOs historically are using leverage from “somewhere”. In China the government is the ultimate stop for defaulting loans at banks, We the people as a collective will be the backstop here too. It’s all setting for the perfect storm. Thanks for posting.
This system is not built on risky collateral. It is built on certainty like the US treasury issuance which currently offers an attractive short term but a risky long term interest rate structure.
You should have been on the board of directors of Silicon Valley Bank (SVB). They needed that insight!!! Dominoes are going to call and then fall. When the $usd gets short squeezed higher it may be a great time to diversify out of USD. I am looking at 104$usd target. I could just be a deer in the headlights waiting too long.
Thank you for the coverage, Wolf.
What are the local property tax implications? If I understand correctly, the taxation levels are tied to the utilization of commercial properties. In my northeast suburban town, we gave tax abatements for several new office campuses (on top of aging buildings in our town, which presumably were not suitable, and thus entirely new buildings with huge parking lots needed to be constructed, along with intersection/road improvements). These are not towers, but 3-4 story sprawling buildings in suburban office parks. The pandemic hits, and **presto**– corporations no longer need the space, and it has not been re-occupied. I talked with our town economic development guy, and apparently we get screwed out of property taxes, since there are provisions where if the property is not utilized (but of course is still valuable), the taxes cannot be collected (at least at the anticipated, and effectively negotiated level per the abatement agreement). Wondering if this plays into return to office politics, even though a lot of knowledge workers can do just fine with a home office (which opens up another question of local taxation, where residential property taxes are being paid, but the home is being used for commercial purposes).
By the way, that plot of “Office CMBS Delinquncy Rate, %” is disturbing. I would wonder if we will see yet another “Too big to fail” scenario and we all get to pay the bill with a government bailout, with a transfer of private to public debt?
I also wonder about the local tax revenue problem. With downtown office buildings selling at 50-70% discounts there has to be a drop in tax collections. Then what? Cut spending? Raise taxes?
Thanks for the article. I know it was centered on office distress, but also concerning is that the Trepp report you cited disclosed multifamily delinquency rates increased to 6.11% in May 2025 from 1.70% 12 months prior. It at least appeared to be improving from April.
CMBS is really a slow-moving train wreck. Like most things, it’s hard to say if / when it will arrive at tipping point that plays some part in the generation of the next recession.
Thanks for the good reporting, Wolf!
Potentially dumb question. Especially during ZIRP, but not limited to it, did corporations take advantage of that, and also park a lot of money overseas, such as Cayman Islands, and then use that to buy their own money to buy their own corporate bonds and prop up stock through buy backs? Feels like large corporations can make a lot of money simply off abitrage. It’s an area I don’t understand but hear a lot about but in today’s click bait world I tend to be suspicious. Money stored overseas seems much more difficult to track so it seems them having an inside game makes sense and technically probably not illegal.
The 2013 Senate investigation revealed: Apple keeps profits from foreign-manufactured devices sold in the in Ireland, invests that cash in Treasury securities and other US securities, etc. and manages all this from the US. Then it borrows in the US and buys back its own shares. The purpose is that it doesn’t have to repatriate the profits and pay income taxes on them:
https://wolfstreet.com/2013/05/22/revealed-apples-offshore-cash-isnt-even-offshore/
Other companies are also doing this, which is why Ireland’s holdings of US Treasury securities are so huge:
https://wolfstreet.com/2025/05/17/foreign-investors-loaded-up-on-treasury-securities-in-march-despite-all-the-turmoil-in-the-media/
Seems inconsistent or worse that Congress continues to cut corporate taxes all the while this is going on. Sounds like just to put on a dog any pony show to get votes come election and then just forget about it. Seems like perhaps invading annexing Ireland be versus Greenland would be better play. UK seems to go a long with US on most things so probably an easy win.
Many, maybe most, office jobs will be replaced by AI. The only secure careers are in trade school jobs, like plumbers and electricians, where the worker needs to use his hands, not so much his brain. AI is brain replacement. Maybe robots will become good plumbers and electricians, but I doubt it.
So-called ‘Ai’ can’t even perform the most basic tasks correctly and never will so isn’t going to be replacing anything at all. AI is pure BS.
AI is just getting started. Perhaps you should get your head out of the sand.
Show me an AI company that isn’t burning investor money.
You should look into OpenAIs financials. Wolf should do an article on how fast they are burning money.
Started doing what? Being exposed as totally bogus?
ChatGPT can write code. I’ve seen it used in my work group and even used it for that myself once. It makes mistakes, so we feed the error messages back into it, and the AI fixes them after a reasonable number of iterations. The net result can be working code in a programming language we either didn’t know at all, or only have a basic knowledge of. I don’t know about you, but to me that’s incredible.
I don’t know if this is the technological singularity, but if not, it’s at least another revolution like the industrial and information revolutions.
The corporate hope of eternally low taxes is not to be had in a populist world. The masses of blue collar workers will eventually get their wish, which is a higher corporate tax rate and fewer deductions to make it all “vanish” from the accounting ledger.
Pretty obvious the solution to empty business towers is to have Artificial Indentured workers fill them up.
XC! ..archly-hilarious as ever (as any innocent hilarity continues to evaporate), good to see your handle…
may we all find a better day.
Thank you Wolf for another excellent article!
MSM doesn’t report this as a crisis for probably a few reasons.
Here are my somewhat cynical thoughts..
1) As Wolf pointed this out, extend and pretend has made this a drawn out issue and not an immediate crisis. Federal, State, and local governments as well as private corporations have promised RTO which should fix the issue. However, RTO is slow in coming back as pointed out in comments above. Older building teardowns have been happening since long before I was born.
2) So far, the biggest losers are the investors who consist of the top 5% of the population with diversified investments (they’ll feel a small pinch. Mom and Pop traditionally don’t own large office buildings.), insurance company investments(we all will feel the pinch as they spread their losses with higher premiums while blaming something else).
We will hear more about this if state, city, and private pensions start losing enough to cut payments. I don’t know how close this is.
Even in the Great Recession of 2008, the commercial building effect paled vs the housing bust that affected many.
1974 “The Towering Inferno” – – At the opening party of a colossal San Francisco skyscraper, a massive fire breaks out due to careless building practices by the contractor, threatening to destroy the tower and everyone in it.
Get it on DVD!