Billionaire investor Jeff Greene made $800 million betting against the last housing bubble. He just rang the alarm on US real estate.

• The property billionaire Jeff Greene has sounded the alarm on commercial real estate.
• He said that offices would be hit hard if recession struck and AI eliminated some white-collar jobs.

A real-estate billionaire who made a fortune shorting the mid-2000s housing bubble is bracing for another painful downturn.

"We are heading into a very frightening time in the entire real-estate industry," Jeff Greene warned in a Fox Business interview on Friday. He said many businesses and consumers would fall behind on their rent and mortgage payments because of higher interest rates and struggle to secure financing as banks pull back from lending.

Greene said that the pain in commercial real estate was only just beginning. Some parts of the heavily leveraged sector face crippling debt costs and a credit crunch, pressure on asset values, and a structural shift toward remote and hybrid working.

"What's happening in office space today? This is before the slowdown," he said. "Wait until we have the recession."

The real-estate tycoon added that historic amounts of fiscal and monetary stimulus during the pandemic were still shoring up demand and employment in the US economy, staving off a surge in late payments and foreclosures. However, he said that companies would pare their workforces and office spaces as the economic picture darkened and higher borrowing costs squeezed them.

"How about when AI starts to kick in?" he added. "That's gonna be a sledgehammer to white-collar jobs."

Greene raked in an estimated $800 million profit by betting roughly $50 million on a tidal wave of defaults on subprime mortgages in 2006 and 2007, according to Forbes. He got the idea to buy credit-default swaps on mortgage-backed securities from the hedge-fund manager John Paulson, who made about $15 billion for his clients from similar wagers.

Michael Burry, the investor of "The Big Short" fame, employed a similar strategy to cash in when the housing bubble burst.

Greene's latest comments echo those of the "Shark Tank" investor Barbara Corcoran, who recently said that corporate tenants were starting to fall behind on their monthly payments, which could spell trouble for commercial real estate overall.

"I don't see that turning around," she said. "I think it's going to be a bit of a bloodbath before it gets better."