They can - but that requires both parties to the contract to agree on modification.

If I'm a bank holding a commercial mortgage, it's very finely honed to minimize my risk; as part of that, I contractually limit what can be done with the building.

Why would I, as a lending institution, throw that security away for something much riskier? If the emptying out of commercial buildings that we saw during the pandemic accelerated, that might have provided the incentive. But it seems like that trend line isn't going to continue in force.

I think converting high density commercial properties to residential is a great idea in a lot of cities. But ultimately it's going to be done almost exclusively in buildings that are mortgage free.