New research from Yardi Matrix indicates that the U.S. office sector is heading into a period of elevated refinancing pressure as a large volume of debt approaches maturity against a weaker demand backdrop. The data show that roughly 14,000 office properties across the country are tied to loans that have recently come due or will mature by the end of 2028, with a combined balance of $289.2 billion. Those loans represent 33.5% of the sector’s total office loan volume, pointing to a sizable maturity pipeline that will need to be addressed over the next several years.
According to Yardi Systems’ CommercialCafe report, nearly 59% of the loans in this cohort were originated before 2021. At the time, underwriting generally assumed that strong office demand would persist, supporting rent growth, high occupancy and stable cash flows through the life of the loan. Those assumptions are now being tested as fundamental demand for office space softens.
The report notes that office-using employment has been trending lower since mid-2023, eroding a key source of demand. At the same time, the demand that remains is increasingly focused on the highest quality assets, leaving a growing performance gap between top-tier properties and the rest of the inventory. This bifurcation is occurring as hybrid work becomes more entrenched, reducing the need for space in many offices and challenging landlords in older or less competitive buildings.
These dynamics are converging just as a large wall of maturities approaches. Loans made during a stronger leasing environment are now facing renewal in a context of weaker physical occupancy and evolving workplace strategies. Owners and lenders must contend with question marks around income durability and leasing prospects at the exact moment when capital structure decisions need to be revisited.
Yardi Research director Peter Kolaczynski underscores the scale and persistence of the issue, stating that the office debt problem “is not going away yet.” He points to elevated interest rates and “stubbornly low physical occupancy” as key headwinds that are likely to pressure performance. In his view, these factors are feeding expectations for rising delinquencies and increased distress as the sector works through the current cycle of loan maturities.
Taken together, the research highlights that a significant share of U.S. office debt must be refinanced, extended or otherwise restructured in the coming years, and that this process will play out under more challenging operating and capital market conditions than those that prevailed when many of the loans were originally made.
