“Banks in the US will lose $200, $250 billion in office over time here,” Bass, founder of Hayman Capital Management, said in an interview with Bloomberg TV Monday. “And there’s about $2 trillion of equity in the banks so it’s like a 10% hit to US banking equity.”

Office space is the main sector that will report losses in the commercial real estate market, while industrial and multi-family will remain strong, said Bass, who’s known for his successful bet against subprime mortgages before the 2008 financial crisis.

Bass has predicted that older and lower-quality office buildings in the US will need to be razed to reset the market. He’s not alone in that view. Canadian investor Vincent Chia is buying up proprieties only to tear them down and profit from the land.

Elevated interest rates and tight lending conditions are making it even more difficult for property developers. While Bass doesn’t expect the Federal Reserve to raise interest rates much higher, he expects wages to remain strong.

“We are going to have a sticky situation with wages and we are going to see the economy coming down in the next six to eight months,” he said.