Lenders are seizing distressed commercial properties at the highest rate in nearly a decade, with foreclosures reaching USD20.5 billion in Q2, up 13% from Q1. This surge suggests the commercial real estate market may be nearing a bottom. High interest rates and slow office worker returns have driven defaults. Despite previous reluctance, lenders now accept that many office buildings won't regain value, leading to more foreclosures and short sales. Smaller banks and investors like Blackstone Mortgage Trust, which has high exposure to office loans, are facing increased problem loans. Last week, Blackstone cut its dividend and increased loss reserves by 19% to over USD900 million. While the foreclosure level is below the 2008-09 crisis, ongoing challenges are expected, especially for outdated office properties.