Looks Like the CRE Debt Crisis is Imminent

Recent commentary and headlines from respected financial experts and publications indicate we are in a “code red” moment as $1.5 trillion in commercial real estate debt comes due over the next two years.

The timing of the current CRE refinancing cycle couldn’t be worse. In July 2023, office vacancy increased to 17.1%, and it is estimated that by 2025, office building values will plunge 35%, and portfolio income received for leasing will dive 20%. That is less than two years away…extraordinarily alarming! Combine these risks with the need to refinance the commercial real estate debt at much higher interest rates, and Fitch’s downgrade of the U.S. credit rating (which evaluates the country’s ability to pay its $31 trillion in debt) playing in the background (the second downgrade in the history of the United States!) and we have a real code red moment on our hands!