Are government contracts a safe investment? We investigate this question using unanticipated Department of Government Efficiency (DOGE) cancellations of federal leases as a shock to commercial mortgage default risk. Offices with DOGE-notified leases experience persistent net operating income declines exceeding 15%, with large, negative effects on CMBS prices and rental cash flows tied to nearby private-tenant properties in Washington, D.C. Spillovers are driven by increased vacancy from tenants with high exposure to procurement contracts involving disrupted federal agencies. Simulations of office property value losses from early lease terminations indicate substantial market-wide repricing of government contract risk.

We show that mortgage lock-in effects play a significant role in commercial real estate. We develop a bargaining model in which owners with low interest rates have high reservation values and thus sell at higher prices. Consistent with the model, we find a 17% reduction in sale probability and a 4% increase in price for locked-in properties when market rates are 100bp above the fixed rate on the mortgage. Additionally, unlocked properties in more locked-in markets sell at higher prices, consistent with a market-wide effect. Overall, our results indicate that lock-in effects mitigated price declines significantly in the recent bust.

We quantify how remote work and tighter credit reshape the long-run spatial equilibrium of U.S. office markets. Across nine metros, we estimate a tract-level office supply elasticity averaging 1.6 via a Bartik-style instrument on Firm Market Access, with wide cross-tract heterogeneity. We embed these estimates in a spatial equilibrium model in which workers choose residence, workplace, and work mode; firms combine on-site labor, remote labor, and office space; and developers face a debt-service-coverage constraint that binds in 89% of New York tracts. Higher remote productivity reallocates office demand toward high-productivity high-remote-share locations--the observed flight to quality--while financial frictions raise mean Manhattan rents by 4% and contract floorspace by 14%, with sharper effects as financing rates rise. Model-implied long-run Manhattan prices are 31-33% below the 2024 transaction median, and 56% below once a post-WFH risk premium from Office REITs is imposed.