More expected delinquencies for commercial mortgages, especially those tied to office properties, have led Wells Fargo and JPMorgan Chase to increase their loan loss allowances.

Wells Fargo increased its credit loss allowance by $949M, primarily for office loans, the bank announced in its second-quarter earnings release on Friday. Wells Fargo is the largest U.S. bank lender for commercial properties.

“The office market continues to be weak,” Wells Fargo Chief Financial Officer Mike Santomassimo said during a quarterly earnings call.

He added that office loans represent $33.1B of the total $154.3B in outstanding CRE loans, and office loans represent 3% of its total outstanding loans.

JPMorgan’s commercial banking business also increased reserves to the tune of $389M, partially due to updates in assumptions for office real estate, Bloomberg reported.

JPMorgan’s exposure to office is “quite small,” and exposure to urban, dense office is even smaller, Chief Financial Officer Jeremy Barnum said during that bank's earnings call Friday.

“We'd like to be sort of ahead of the cycle, and based on everything that we saw this quarter, it just felt reasonable to build a little bit there to get to what felt like a comfortable coverage ratio,” he added.

Property owners grappling with higher borrowing costs and lower demand due to remote work and layoffs precipitated the banks' moves to brace for potential losses, according to Bloomberg.

Some owners are defaulting on loans, which is often an attempt to spur renegotiations with lenders, according to Bloomberg. Commercial real estate lending has dropped sharply due to rising interest rates and uncertainty about property valuations, CoStar reported.

About $189B of debt on U.S. office real estate needs to be extended or refinanced this year, half of which is borrowed from banks, Bloomberg reported, citing the Mortgage Bankers Association.