For the last two years, many lenders, brokers, analyst firms, and other experts have warned about a coming CRE debt maturity wave. JLL has sized this wave and estimates that the total due by the end of 2025 is $1.5 trillion and that about a quarter, or $375 billion, will have a hard time refinancing.
The basics have faced the industry for years now. Through the pandemic, two events happened. One, the Federal Reserve pushed an easy monetary policy to increase liquidity, and the federal government pumped rescue money into the economy, both at rates never before seen. Two, inflation quickly rose, as classical economics would suggest, and the Fed boosted interest rates to battle it.
Higher borrowing rates were a shock even though they weren't out of keeping with historical norms. However, CRE borrowers recently experienced ultra-low rates, as Fed Chair Jerome Powell has described them. The differential was sudden and high. Transactions fell and, as a result, so did the valuations of many properties.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.