Post-pandemic office reckoning underestimated. Bill now due. Loan maturities + closed refinancing market + record vacancy = one of largest credit events in commercial property history.
$1.5 trillion CRE debt matures in US through end-2027. Originated under cheap money, full offices, rising rents — none of which hold now.
Office vacancy averages 22.7% across major US markets (no modern precedent). San Francisco >34%, downtown Chicago >26%, Manhattan 18.4% w/ record sublease, rents falling real-terms 3rd year.
Refinancing arithmetic brutal: building appraised $200M in 2021 (92% occupancy, 4% cap rate) now worth $100–120M. Original loan $130–140M. Underwater. Owner can’t refinance, bank can’t pretend collateral holds face value.
Worst maturity concentration 2026–2027 — tail of 5yr/7yr loans from zero-rate 2019–2022 era.
Exposure concentrated in opaque institutional categories. Most alarming = private credit: debt funds expanded into CRE bridge lending, higher leverage, weak covenants. Unlike bank loans (quarterly call reports, regulated), private credit disclosed only to investors on 90-day lag. Full losses unknown until Q2 reporting in September.
[Paywall] Full analysis: regional banks w/ greatest cliff exposure, CMBS delinquency tracking, three 2026–27 price-discovery scenarios, disorderly unwind impact on broader credit.