According to a recent report by Newmark, the commercial real estate industry is facing an estimated $332 billion in potentially troubled debt that is set to mature this year. This accounts for one-quarter of the total $1.3 trillion in potentially troubled debt due between now and 2033.
The majority of these maturing loans are tied to office properties, with a staggering amount of $184 billion. However, the apartment sector also makes up a significant portion at nearly one-third with $106 billion.
Interestingly, as we look ahead towards future years, there will be a shift in which sector contributes more towards potentially troubled maturities. From 2028 through 2033, apartments will surpass office as they account for larger shares of these types of loans.
When compared against both office and apartments though, retail falls behind significantly while industrial trails even further behind ranking fourth on this list. According to Newmark’s latest United States Multifamily Capital Markets Report , “the high volume seen in offices can be attributed to most loans being underwater.” On the other hand,”the distribution LTV ratios for multifamily [is] more favorable overall” but due its size and concentration during recent liquidity bubble drive nominal exposure.”
In conclusion,the potential risk posed by maturing apartment loans may soon overtake that posed by office properties according Connect CRE .
