The true level of distress in the office sector is likely understated by the official 11% delinquency rate.
A significant portion of the market consists of "have-not" properties that will struggle to refinance, leading to more defaults and "jingle mail."
The large, rolling wave of maturities in 2026 and 2027 will continue to be a source of stress, particularly for loans underwritten at peak optimism in 2021.
Potential for macro curveballs, such as changes at the Federal Reserve or unanchored long-term rates, could disrupt the market.
Opportunities Identified
Strong CMBS and CRE CLO issuance provides significant liquidity and investment opportunities in the debt markets.
A competitive lending environment exists for high-quality, well-sponsored assets, allowing for favorable financing terms.
Increased distress resolution and loan-to-own activity will create acquisition opportunities for well-capitalized, opportunistic buyers.
Certain property sectors, such as multifamily in specific markets, could see double-digit price increases.