Posted 1/3/2024, 10:27:00 PM
Office Loan Delinquencies Hit 5-Year High, Projected to Climb Further as Maturities Loom Amid Rate Volatility
- Office-loan delinquencies hit a 5-year high of 5.28% in November 2022 for mortgages in CMBS deals, and are expected to climb further in 2023
- Delinquencies are projected to increase as borrowers who financed at low rates face higher borrowing costs amid a wave of maturing debt
- The outlook depends on Fed interest rate moves and the economy; rate volatility makes it an uncertain market for borrowers
- Office revenues have fallen sharply despite a strong labor market benefiting other property sectors like hotels and warehousing
- Around $1.2 trillion in total commercial real estate debt matures through 2025, adding to concerns among regulators