Recent reports and articles have discussed upcoming commercial real estate debt maturities, with a main focus on the office sector. A white paper released by CommercialEdge indicated that “conditions are ripe for a spike in commercial mortgage delinquencies” due to rising interest rates, lender cut backs and weaker property fundamentals. Citing from Trepp, the paper noted that the percentage of CMBS loans in special servicing closed out April 2023 at 5.6%, down from 10.5% during pandemic peak but twice pre-pandemic level of 2.7%.
The report indicated 15.6% of office properties nationwide will reach maturity by 2025 while 13.5% industrial property loans will also mature between 2023 and 2025 – indicating distress is much different among property types depending on sector fundamentals; weak demand & high vacancies in offices versus strong demand & rents for industrial properties meaning lower likelihoods for distress respectively . The number maturing office/industrial CRE loans varies geographically too – Atlanta & Chicago top five markets with highest numbers while Los Angeles ranks amongst those where significant percentage (20%) reaches maturity by 2025; Columbus OH leads 25 US markets with 24 % subject to maturing loan stock by then . Yardi Matrix Director U S Research Paul Fiorilla put any concerns about current scenario being comparable to Great Financial Crisis waves defaults/delinquencies rest citing healthy demands apartment , industrial , self storage sectors plus banks not lending as aggressively this cycle than 2005-2007 period when acquisitions financed 90+ leverage optimistic rent growth assumptions were common place .
