In 2024, the office market will face challenges as a large number of commercial real estate loans reach maturity, making refinancing difficult. According to Moody’s Analytics, there will be $182 billion in maturing loans for all types of commercial properties, with $47 billion specifically for office properties.
Moody’s has analyzed the repayment status of CMBS loans by sector and found that in 2023, a significant majority (68.6%) of office CMBS loans were not paid off at maturity. This is higher than the percentage for mall properties (41%), which are known to have divided ownership structures and often struggle with loan repayments.
Recent trends show that smaller loans and stable tenancies tend to perform better when it comes to loan repayments. However, the effects of the pandemic continue as companies downsize or relocate their offices, increasing risks for lease renewals. Moody’s predicts a high likelihood that many office loans will not be refinanced in 2024 due to lease turnovers and existing loan conditions.
This forecast highlights potential difficulties facing borrowers seeking financing options in an already challenging market environment.
