Office Landlords Can't Get a Loan Anymore

NEW YORK - Dec. 18, 2023 - PRLog -- Many office owners can't pay back their old loans because they can't get new mortgages. Remote work and rising vacancies have hit building profits, making it harder to pay interest. Higher interest rates have pushed debt costs up and building values down.

The downturn in the market for commercial office space has caused an increasing number of distressed property owners to make the decision to simply walk away—from mortgages they either can't pay now or can't afford after they refinance at starkly higher interest rates.

Owners from small niche property developers to private equity giants such as Blackstone, the world's largest commercial landlord, have all made that decision in recent months.

The trend adds another troublesome wrinkle to a commercial office market riddled with troubled loans, rising delinquencies and plunging property values.

Surging interest rates have made refinancing those loans a losing proposition for office property owners. This year alone, the Mortgage Bankers Association estimates that $92 billion in non-bank office debt will mature. Borrowers will either need to refinance that debt, default on it or sell the underlying property.

Many commercial real estate investors have been turning to the private sector for commercial real estate loans.

These commercial real estate investors are getting financing at much higher interest rates, however because of rising values in some markets combined with savvy investors maintaining high levels of equity in their properties they can refinance.

Winston Rowe and Associates prepared this article, they are a national commercial real estate due diligence and financing firm. You can contact them at 248-246-2243 or visit them online at https://www.winstonrowe.com