Commercial Real Estate

The heads are finally starting to roll in commercial real estate. And another $200 billion of office mortgages remain outstanding and will need to be refinanced before the end of 2026. This could turn out much worse than the subprime-lending fiasco from 2007.

Bank loans are becoming harder to obtain. Meanwhile, credit ratings on corporate bond issuers are improving. The freight train represented by credit tightening is hurtling down the track, but it hasn’t arrived at the station yet.

A record $2.5 trillion of CRE debt will mature between now and the end of 2027. However, several massive headwinds could make it more difficult than usual for borrowers to refinance these debts this time.