The U.S. Federal Reserve's stress test revealed that big banks are able to withstand a 40% drop in commercial real estate values, easing concerns about the banking industry amid challenges faced by landlords in a high-interest rate environment. As vacancy rates hit record highs, investors turned to the Fed's test to assess banks' exposure in the face of pandemic-related changes in work habits. While the results provided some comfort, it is clear that commercial real estate still faces challenges. The test also showed that banks have enough capital to weather nearly $685 billion in losses, highlighting their ability to continue lending during a severe economic downturn. However, concerns remain about the looming maturity of commercial mortgages and declining property values. Analysts predict a difficult road ahead for commercial real estate, with banks facing significant risks. Despite this, criticisms of the test include the exclusion of regional banks, which hold a large portion of CRE loans and are less regulated than larger institutions.