Commercial Insights

As we outlined in the May 5th Commercial Pulse Report, the commercial office space sector has been at the center of economic debate over the past several years. Headlines often focus on rising vacancies, remote work, and uncertainty around the future of office demand. But beneath these structural shifts lies a more nuanced—and in some ways unexpected—story. Despite ongoing pressure on occupancy levels, commercial office space businesses are demonstrating notable financial resilience, particularly when viewed through the lens of commercial credit performance. This divergence between market sentiment and underlying credit health is one of the most important dynamics emerging in today’s commercial landscape. Watch The Commercial Pulse Update A Sector Reshaped by Remote Work The transformation of the office market can largely be traced back to the rapid adoption of remote work. Prior to the pandemic, remote workers accounted for just 6.5% of the workforce. That number surged to 35% during 2020 and has since stabilized at approximately 22%. This shift fundamentally altered demand for office space. Vacancy rates, which were at a low of 11.4% in late 2019, climbed steadily to a peak in 2025. While vacancy levels have begun to stabilize, they remain elevated compared to pre-pandemic norms. For many investors and lenders, this has raised valid concerns about long-term asset performance and cash flow stability. However, vacancy rates alone do not tell the full story. The Pricing Paradox: Rising Rents Amid Higher Vacancies One of the more counterintuitive trends in the office sector is the continued rise in rental pricing. Even as vacancies increased, average asking rents have climbed to over $38 per square foot nationally. This trend is largely being driven by geographic concentration of demand. Major metropolitan areas such as Manhattan and Miami continue to exhibit strong occupancy fundamentals, with vacancy rates below 15% and rental prices significantly exceeding national averages. In effect, the office market is becoming increasingly bifurcated. High-demand, premium locations are maintaining pricing power, while other markets face more pronounced vacancy challenges. For lenders and credit professionals, this reinforces the importance of market-level and asset-level differentiation when evaluating risk. Credit Demand Is Normalizing Another notable shift within the office space sector is how businesses are engaging with credit. Historically, companies operating in this segment exhibited higher levels of credit demand compared to other industries. However, that gap has narrowed considerably in recent years. By early 2026, office space businesses are now seeking commercial credit at rates slightly below those of other sectors. This normalization suggests a maturing post-pandemic environment, where businesses are adjusting to new operating conditions and capital needs. It may also reflect more disciplined borrowing behavior as companies navigate uncertainty around long-term space utilization and revenue models. A Distinct Credit Profile Beyond overall demand, the composition of credit usage within the office space sector also stands out. While commercial cards remain the most widely used credit product across industries, office space businesses show a greater reliance on term loans and lines of credit. At the same time, they maintain relatively lower exposure to commercial cards compared to their peers. This distinction is meaningful. Term loans and lines of credit are often associated with longer-term financing strategies and structured capital needs, whereas commercial cards tend to support shorter-term, operational expenses. The mix suggests that office space businesses may be taking a more strategic approach to capital management. Stronger-Than-Expected Credit Performance Perhaps the most compelling insight from the data is the sector’s risk profile. Despite widespread concerns about office market fundamentals, businesses in this space are outperforming other industries on key credit metrics. Late-stage delinquency rates for office space businesses are approximately 0.27%, compared to 0.70% for other industries—less than half the rate. In addition, these businesses tend to maintain higher average commercial credit scores, further reinforcing the view that they represent a relatively lower-risk segment from a credit standpoint. This combination of lower delinquency and stronger credit scores points to disciplined financial management across the sector, even amid structural disruption. Reconciling Risk Perception vs. Reality The disconnect between perceived risk and actual credit performance raises an important question: why does the sector still feel so risky? The answer lies in the difference between structural market challenges and near-term financial behavior. Elevated vacancy rates, evolving workplace trends, and uncertainty around long-term demand all contribute to a cautious outlook. These are legitimate concerns, particularly for asset valuations and long-duration investments. However, current credit data suggests that many office space businesses are adapting effectively. They are managing debt responsibly, maintaining strong payment performance, and aligning their capital strategies with a changing environment. For credit professionals, this highlights the need to balance macro-level narratives with granular, data-driven insights. What to Watch Going Forward Remote work trends: Will hybrid and remote models continue to suppress demand, or stabilize at current levels? Operating cost pressures: Rising energy prices and inflation may impact both landlords and tenants, influencing margins and credit demand. Market bifurcation: Performance gaps between high-demand metros and weaker markets may widen, increasing the importance of localized risk assessment. Credit discipline: The sector’s strong credit performance will be tested if broader economic conditions weaken. A Sector Defined by Transition—and Resilience The commercial office space market is undeniably in transition. Structural changes driven by remote work have reshaped demand, and elevated vacancies remain a persistent challenge. Yet, the data tells a more balanced story. Strong rental performance in key markets, disciplined credit usage, and low delinquency rates all point to a sector that is more resilient than headlines might suggest. For lenders, risk managers, and commercial credit professionals, the takeaway is clear: understanding today’s office market requires moving beyond surface-level indicators and focusing on the underlying financial behavior of businesses within the sector. Because in this case, the credit data may be telling a very different story than the skyline. Learn more ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts

Experian's latest Commercial Pulse Report reveals rising car prices drive demand for used vehicles as commercial credit lines for b2b decline

Experian Commercial Pulse Report reveals decline in total number of ecommerce businesses, strong revenue, and fewer credit inquiries.

Commercial Pulse Report | 6/17/2025 Economic uncertainty is often seen as a deterrent to growth, but for many Americans, it’s become the fuel for a fresh start. As inflation wavers and traditional employment structures shift, more individuals are stepping out of corporate roles to pursue business ownership. In this week's Commercial Pulse Report, we take a closer look at what's driving this wave of entrepreneurial activity. Gen X Leads the Charge Toward Self-Employment According to Guidant Financial's 2025 Small Business Trends report, Generation X is leading the charge. Many in this age group are opting out of traditional career paths, motivated by a desire for autonomy, flexibility, and a more purposeful work life. According to Guidant’s report, Gen X holds the largest share of U.S. small business ownership, with a significant portion of these entrepreneurs transitioning from established careers. What’s driving this shift? Dissatisfaction with corporate life and a strong desire to be one’s own boss are leading motivators. It’s a story of experienced professionals reevaluating priorities and seeking more control over their financial future. And it appears to be a fulfilling decision—75% of small business owners report being happy with their choice to go independent. Retirement Savings Power New Ventures A surprising—but telling—statistic in ’s report: 53% of new business owners used 401(k) retirement funds to launch their ventures. This trend underscores a growing willingness to invest personal wealth into long-term entrepreneurial aspirations. Known as Rollovers as Business Startups (ROBS), this approach allows individuals to use retirement funds without early withdrawal penalties. It’s a bold move, signaling high confidence among business owners—but also highlighting gaps in access to traditional funding channels. Entrepreneurs are taking on more personal risk, in part because institutional capital isn't always accessible to young businesses. Interestingly, 56% of all new businesses are either newly founded or existing independent ventures, showing a diverse range of entrepreneurial approaches—from solo startups to revitalized legacy brands. The Credit Dillema for Young Businesses Experian’s data shows that businesses under two years old account for more than 50% of new commercial card originations. These companies are opting for credit cards over term loans due to fewer barriers to entry, but this often means lower funding limits. Meanwhile, newer businesses face steeper challenges securing traditional loans. They now represent just 15% of term loan originations, down from 27% in 2022. For lenders, policy makers, and service providers, these trends underscore the need to rethink how we support emerging businesses. From alternative funding tools to better credit-building pathways, there’s a growing opportunity to empower America’s newest entrepreneurs. Stay Ahead with Experian ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts

Experian Summer Beyond The Trends Report Now Available We are excited to announce the release of the Summer 2024 Beyond the Trends report. The report offers a unique view of the small business economy based on what we see in the data. With up-to-date information on over 33 million active businesses and how they perform from a credit standpoint, in this report, Experian shares insights and commentary on how economic conditions, public policy, and other factors might shape future small business performance. Here's our V.P. of Commercial Data Science, Brodie Oldham with his quick take. Overall, the sentiment among small businesses regarding growth is cautiously optimistic. Optimism Despite Challenges There is a general sense of optimism reflected in the U.S. Chamber of Commerce Small Business Index, which has risen to 69.5. Additionally, 73% of small businesses expect higher revenues, and 46% plan to increase investments, indicating positive growth expectations despite facing persistent challenges such as inflation, worker shortages, and rising operational costs. Government Support and Initiatives Various government programs and initiatives are bolstering small business growth by improving access to capital and providing targeted support. These initiatives include the Investing in America Small Business Hub, expansion of Women’s Business Centers, and improvements in the 7(a) and 504 Loan Programs, all aimed at facilitating job creation, growth, and sustainability. Technological Adaptation The adoption of AI and other advanced technologies by small businesses is enhancing operational efficiency and cutting costs. A significant increase in the use of AI-driven systems, such as CRM and automated inventory management, indicates that small businesses are leveraging technology to drive growth and stay competitive. Resilience Amid Economic Pressures Despite facing economic headwinds like tighter credit conditions due to higher interest rates and ongoing supply chain disruptions, small businesses have shown resilience. They continue to navigate these challenges by employing innovative strategies and adapting to the evolving economic landscape. Download your copy of the latest report and check out more insights on small businesses on our Commercial Insights Hub where you can subscribe to updates. Download Beyond The Trends Report Commercial Insights Hub

Since January 2021, a seasonally adjusted average of 444K new businesses opened each month, 52% higher than the pre-pandemic 2018-2019 monthly average. In light of the influx of new businesses, and in a higher-interest rate environment, the goal of this week’s analysis was to evaluate if commercial credit usage and payments by product shifted pre- and post-pandemic. Businesses with two different trade types were evaluated as of 2018 (prepandemic) and 2022 (post-pandemic). The two-trade-type combinations observed were Card + OECL (open ended credit line), Card +Term Loan, Card Lease, and Card + LOC (line of credit). Despite more younger businesses entering the market and lenders tightening credit policies over the past two years, businesses with two-trade types had higher lines/loans post-pandemic. Delinquencies also increased post-pandemic for all the two-trade type combinations except businesses with a Card & OECL. Commercial Cards are the most prevalent type of credit for businesses. As businesses grow, they seek additional credit for business needs such as expansion, new facilities, and acquisitions. When businesses seek additional credit, it is most often in the form of commercial loans, leases and credit lines which compared to cards, generally provide higher levels of funding, longer terms and higher monthly fixed payments. For businesses that had two types of accounts, including a commercial card with another commercial credit product, the commercial card stayed current longer and more often the non-card product went delinquent first. Businesses rely on commercial cards for day-to-day operating expenses and lower dollar financing needs. Furthermore, commercial card balances are significantly lower than any of the other commercial trade types allowing for a lower monthly minimum payment to keep the card in good standing. What I am watching: Federal Reserve Chairman Powell stated in last week’s Congressional hearings that the Fed will act slowly and cautiously in terms of cutting interest rates. With inflation declining but still persistent and the labor market still robust, rate cuts may not occur until the second half of the year. Download Report Download the latest version of the Commercial Pulse Report here. Better yet, subscribe so you'll get it in your inbox every time it releases, or once a month as you choose.

Small business owners’ optimism remains low due to concerns about the economy and credit conditions. According to the NFIB survey, business owners do not expect current business conditions to improve in the coming months and report that financing is their top business problem. Stringent credit underwriting policies are creating an environment where owners’ current borrowing needsare not met. According to the Federal Reserve’s SLOOS report, many lenders were loosening credit policies in mid-2022, making credit readily available to small business owners. As inflation and interest rates began to rise, commercial credit delinquencies began to increase at a rapid pace and lenders tightened credit underwriting criteria to mitigate accelerated risk. It appears that efforts have worked. Across most commercial credit financial products, the increase in delinquency rates slowed over the past few months. The loans originated under the tighter underwriting is proving to be lower risk. At the same time, account closures have increased suggesting that high risk default accounts are being removed from lenders portfolio’s thus leveling late-stage delinquency curves. As observed in the commercial credit cards space, late-stage delinquencies are leveling out. Lenders continue to issue commercial cards to lower-risk borrowers and while the average loan/line amount for all other financial products has been decreasing month over month, commercial card limits have increased. Monthly lower risk commercial card originations coupled with monthly high risk commercial card account closures is in part slowing and leveling late-stage delinquency rates in the commercial credit market. What I am watching The commercial credit market could shift in 2024. As reported in the SLOOS survey, while lenders are still tightening credit, fewer of them tightened in Q4 2023. If the economy can achieve a “soft-landing” rather than go into recession, lenders will be even more likely to loosen credit standards. The Federal Reserve is expected to start reducing interest rates in 2024, thereby making borrowingmore affordable. According to the December NFIB survey, business owners are planning capital outlays, increases in inventory, increases in hiring in the coming months but require commercial credit to do so. These business expansions will rely on the availability of credit.

As new car production is finally nearing pre-pandemic levels, supply is catching up to demand. For many potential new car buyers that held off because of the tremendous mark-up on new and usedcars during the pandemic, the beginning trend of new car incentives and discounts is welcoming. However, the increase in car loan interest rates are eating up any incentives being offered, and those consumers who have patiently waited are actually worse off now than if they had purchased a car during the past couple of years. Many consumers did purchase cars during the pandemic, driven by necessity. During the pandemic, jobs were lost due to business shuts downs, and many were forced to seek new job opportunities. As remote work became the new normal and the demand for delivery of food and products skyrocketed, people purchased cars at marked up prices to employ themselves to meet this increasing demand. It turned out to be a good business decision as higher interest rates now make car purchasing an even more expensive experience. What I am watching: It will be interesting to see how quickly the automotive industry and car dealers increase the incentives to offset the increased cost of borrowing to purchase a car. After the aggressive interest rate increases by the Federal Reserve to combat inflation over the past 18 months, there is rumbling that the Fed will soon begin cutting rates. If interest rates come down and borrowing for auto loans is more reasonable, the increase in demand will be a welcome sight for the auto sector that finally was able to ramp up supply.

The perception of economic conditions among small business owners grows more pessimistic with the NFIB optimism index still well below the 49-year average and a persistent belief that access to borrowing is likely to get worse. With inflation coming in at 3.7%, still stubbornly above the Fed’s 2% target, it is possible there will be more rate hikes in the coming months, which will make the cost of borrowing even higher. At the same time, small businesses are facing higher financing costs, the cost of labor continues to increase as workers can demand higher wages as employers struggle to find qualified workers for all their open positions. Meanwhile, there are still many signs pointing to a strong economy despite these challenges. Unemployment is still very low by historical standards as noticed by employers trying to fill open positions. Consumer spending continues to be strong with retail sales experiencing their sixth month-over-month gain in a row. As for credit tightening, both businesses and lenders report tightening but it may not be as bad it seems. Regular borrowing by small businesses on a monthto-month basis has recovered to pre-pandemic levels suggesting that even as borrowing costs are higher, small businesses still do have access to credit. New term loans are showing the average loan amount increasing and the number of new originations is only down 3% from the last quarter. Revolving accounts are faring less favorably but are also more likely to have variable interest rates that are sensitive to the increase in Fed rates. What I am watching: The Fed will have a difficult decision to make about interest rates at their next meeting on November 1 and in the coming months. Inflation has come down dramatically from its peak, but progress has stalled in the last few months. Unemployment is still very low and consumer spending is strong, but consumer and small business optimism is down. Housing costs are very high and high interest rates have slowed home sales as the cost to enter is high and existing homeowners are reluctant to sell. All these mixed signals make the path forward to achieve the coveted soft landing difficult to navigate and different Fed chairpersons have indicated different ideas on the matter. How the economy continues to fair in the coming holiday season and the response of the Fed to those conditions will be very closely followed as a result.