The volume of CRE loans coming up for repayment shows no sign of dipping after 2025, either. Analysis by TD Economics suggests that around $2.2 trillion in CRE loans are scheduled for maturity through 2027, with a slowing economic cycle potentially contributing to further pain in the medium term.
That said, while interest rates are projected to remain high for now, “as the Fed monitors the progress on inflation and gears up to cut interest rates, likely starting our mid-year, an expected pullback in yields should help provide some offset,” the bank said.
“Still, it remains to be seen to what extent this would limit the fallout, or if the pullback in rates will be ‘too little, too late.’”
What type of investors are eyeing deals in the current market?
About 80% of the “dry powder” on the commercial real estate investment front is allocated to the multifamily and industrial asset classes, Friedman said, despite those two property types making up likely just over half of the entire CRE ecosystem.
That contrasts sharply with hotels, where potential investment accounts for a tiny fraction of the overall commercial market despite its current share being slightly higher.
Source: mpamag.com