The commercial real estate (CRE) market faces challenges due to high inflation and remote work, but Bank of America analysts believe these issues are manageable and do not pose a systemic risk to the U.S. economy. They expect loan modifications and extensions to become common, helping borrowers avoid higher costs or defaults. Property repurposing and the limited impact of the office sector’s woes on the overall CRE market also support a manageable outlook. Improved underwriting standards and increased equity provide a buffer against risk, leading to the assessment that CRE contagion risk for the broader economy is minimal and manageable.