Though sentiment around the office market has sunk drastically, some economists believe that the fears of an urban 'doom loop' might be too extreme.

Although the office market has faced record-high vacancies and falling values, experts on a panel at the National Association for Business Economics conference in Washington, D.C., this week said there are several signs that major cities can avoid financial crisis, Market Watch reported.

“Intellectually, based on the data, we’ve concluded no doom loop fears here. The industry can make its way through,” Moody’s Analytics Deputy Chief Economist Cristian deRitis said at the event, according to Market Watch. “There is quite a bit of capital in the system. The distribution of CRE loans is not just concentrated in banks."

Erin Patterson, global co-head of research and strategy for real estate at Manulife Investment Management, said there are other financing options out there that are helping and banks have been open to working with borrowers to create value for office buildings.

“That’s an escape hatch from this doom loop,” Patterson said at the event, according to Market Watch.

The term "doom loop" comes from the vicious cycle that occurs when people begin to leave cities, which leads businesses to close and cities to lose tax revenue. This, in turn, leads these cities to cut services and raise taxes further driving people out.

Other economists think this possibility should be taken more seriously, as it could lead to devastating impacts on major metro economies.

As the remote work trend continues, people aren't coming into downtown offices at the same levels as they did pre-pandemic, which has caused office values to drop and led to economic pain in many major cities.

"These commercial property tax revenues are an important component of the budget of local governments, which means less money for police departments, trash collection and some people are going to decide that the quality of life has deteriorated too much and they want out," Columbia Business School professor Stijn Van Nieuwerburgh said last month on 60 Minutes.

Van Nieuwerburgh added that the top 10 U.S. cities have lost over 2 million residents in the last three years, taking with them the tax revenue that these cities rely on.

Boston is projected to face a $1.5B revenue shortfall in the next five years due to declining office values, a new report found this week, while D.C. has seen a 'shocking' plunge in office values and is expected to lose hundreds of millions in tax revenues.