Office Loan Refinancing Expected to Face Heightened Challenges Over the Next Few Years

Nationally, “more than 50% of the $2.9 trillion in commercial mortgages” will apparently need to be renegotiated within the next 24 months as terms expire. The estimated high volume of maturing loans comes at a time when office vacancy rates stemming from ongoing remote and hybrid work schedules are expected to remain elevated, depressing the values and the possibility that lending rates could sharply rise by 450 basis points (4.5%). Although regional banks were previously a reliable source of loan originations for landlords, it has come into question following the recent takeover of Signature and Silicon Valley Bank by U.S. regulators; and while private equity firms may fill some of the gaps, having $2.3 trillion in “dry powder” to possibly invest in lieu of traditional banks, “they may have their own real estate investments to shore up first.”