Even last year, before the total CRE devaluation from post-pandemic highs took place, the issue of metropolitan tax collections had raised its head.

"The divergence in commercial and residential property values makes it hard to predict the fiscal consequences for local governments broadly," Thomas Brosy of the Tax Policy Center, a venture of the Urban Institute and Brookings Institution, wrote in 2023. "Total property tax revenue accounts for 30 percent of local general revenue, but the pain from this transition will likely be concentrated in major cities with big commercial districts."

Look at office alone, as KBRA recently did, and the implications are uncomfortable when you consider three factors: ongoing hybrid work, tech employment downsizing in the face of a shift to artificial intelligence, and in some urban centers an oversupply of commercial real estate.

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