After a decade of steady growth in commercial real estate, an unprecedented wave of property debt is set to come due, raising concerns about refinancing challenges. According to S&P Global, the “maturity wall” (loans requiring repayment or refinancing) will peak at $1.26 trillion in 2027, up sharply from $950 billion in 2024.
The main worry has centered on rising interest rates, according to CoStar. Loans maturing now often carry rates between 4.1% and 4.7%, but current average loan rates hover around 6.5%, making refinancing costlier and more difficult.
However, recent U.S. Federal Reserve rate cuts and improving market fundamentals — including rising occupancy rates and slowing new construction — may offer some relief for borrowers.
Despite fears, widespread distress has yet to emerge. Lenders have largely extended or restructured loans over the past few years, and vacancy rates are stabilizing while rent growth looks promising.
This improving environment could soften the impact of the refinancing surge, especially for high-quality assets.
Still, challenges remain in certain sectors. The office market faces significant pressure due to lingering remote work trends. Commercial mortgage-backed securities (CMBS) data shows more than $21 billion in office loans maturing by 2026, with delinquency rates soaring above 80% for many pre-2026 loans.
This sector’s refinancing difficulties contrast sharply with industrial properties, which boast a strong 96.8% occupancy rate and minimal distress, making refinancing easier.
Multifamily housing loans also show resilience, with delinquency rates below 1% and steady support from government-backed entities like Fannie Mae and Freddie Mac. Retail properties have a sizable $19 billion in CMBS loan exposure but benefit from stable occupancy and income growth, supporting favorable refinancing conditions. Lodging properties face occupancy challenges but could see relief if interest rates continue to decline.
Overall, while the $1+ trillion debt maturity wave through 2027 presents risks, especially for weaker assets and certain sectors like office space, improving fundamentals and recent Fed easing provide hope that refinancing pressures will remain manageable rather than catastrophic.
