Where is Distress Risk in Today’s CRE Market
Where Is The Risk In Today’s CRE Market?
Some Investors Face Greater Headwinds Than Others
- Some CRE segments could see heightened distress this year, but risks are not broad-based 
- Aggressive investors strategies, underwriting and debt profiles will face challenges; urban office properties also face outsized risk 
Some Financing Strategies Have Compounded Risk
- Investors that maximized floating rate leverage, going as high as 80% face substantial risk 
- Investors with floating rate debt who did not get a rate cap or hedge may need to sell or recapitalize assets 
Systemic Behavioral and Societal Changes Pressure Office
- The hybrid work schedule could drive a significant office vacancy increase that snowballs into a broader problem for the market 
- Office properties make up roughly 26% of the loans maturing this year, and distress in these assets could create ripples that impact other urban property types 
*Sources: Marcus & Millichap Research Services, Mortgage Bankers Association


