Cracks in US commercial property markets are spreading. Over-leveraged and underused office buildings in New York and San Francisco are starting to trade hands at knockdown prices. Banks are being forced to mark down loans to realistic levels. Provisions and losses are growing. US regional banks are most exposed but lenders in Europe, particularly specialist German real estate banks, are also on the hook.

Credit agencies recently downgraded the German lenders Deutsche Pfandbriefbank and Aareal Bank. US exposure accounts for about 15 per cent of their real estate lending books. However, they are also among the largest commercial real estate lenders in Germany, where Deutsche Bank leads, followed by state-owned Landesbanks LBBW and BayernLB. Commercial property markets in Germany are so far faring better than the US but America’s pain is likely to spread.

The best analogy for the office market today is the turmoil of retail property following the online shopping boom last decade, thinks Nicola De Caro at ratings group DBRS Morningstar. The enduring popularity of working from home has slashed demand for space, with vacancy rates in some US markets now pushing 20 per cent.