Office buildings across European cities sit increasingly empty. Vacancy rates in Paris, Berlin, and Amsterdam have risen sharply in central business districts. This is not cyclical weakness. This is structural change driven by remote work, changed retail habits, and higher borrowing costs.

Banks and real estate funds hold enormous sums in European commercial property. Most of it was valued when money was cheap and office work was mandatory. Both assumptions are now broken. Interest rates have risen sharply since 2021. Office workers no longer need to commute to a desk five days a week. When the market reprices these assets to reality, losses will be massive. Banks will pass those losses to depositors, taxpayers, or both.

The mainstream press celebrates a green office conversion story. Developers will retrofit empty towers into apartments, the narrative goes, and cities gain housing. This ignores the economics. Retrofitting an office building into residential units costs dearly. A developer needs a substantial profit margin to justify the work. Higher construction costs and weak housing demand in many cities make that margin impossible. Most towers will simply sit vacant, anchor tenants gone, waiting for a buyer who can absorb a money-losing asset.

Regulators and central banks have done little to reckon with this. They printed money to prop up property values for years. Now they treat commercial real estate as a market problem, not a policy failure. They do not say that their own interest rate increases triggered the repricing, or that banks lobbied against higher capital reserves to cushion exactly this moment.

Small property owners, retail tenants, and workers in these office buildings will pay for the repricing. Large banks and real estate funds with political connections will get bailouts. This is not secret. Everyone sees it coming. The only question left is how long authorities will pretend otherwise.