This is CBS, I In The World. I'm John Batcher. Welcome in Chris Regal to CEO of Scala.com.

This is the Scala Report looking at the global economy. Scala.com is a global technology firm

transforming the retail space with digital signage. We begin however with commercial real estate.

Chris has followed very carefully commercial real estate since the depths of the pandemic.

This would be the spring summer of 2020.

Asking the very logical question, what about the buildings where no one has returned to the office

or only partially returned or the changing assumptions of work from home and work from the office?

Chris, a very good evening to you. I was not surprised but then I was to find that a Canadian observers

are also seeing a decline in commercial real estate occupancy in Canada.

A quick dimension, this is nowhere near as bad as it is in the US.

A quick dimension that it is nowhere near as bad as it is in San Francisco. The numbers look like this.

The Canada wide downtown office vacancy rate jumped to 17.7% at the end of 2022

from 10.2% before the pandemic. Slightly larger increase than in the US.

Then they go on to say this is nothing like the 24% surge in vacancy in San Francisco,

tech-centric San Francisco. These are two outlier statistics that support your general observation

that commercial real estate both has a vacancy problem and a problem of the leases either not being paid

or there being no way for those leases to be reorganized as they were in the past because of work from home.

Have you seen in your travels any national answer to this story of what you would say at this point

is going to be trouble ahead?

I think what you have in commercial real estate as well as what you saw with Silicon Valley Bank

is maybe one of those perfect then diagrams of intersecting problems.

When Silicon Valley Bank ran into its troubles, it was a re-valuation of assets on the bank's books.

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