Michael Leahy, a senior research data analyst at CBRE, recently reported on the growing office and multifamily debt funding gap. According to CBRE Econometric Advisors’ recent report, the funding gap for office loans has increased to $82.9 billion while multifamily properties have a $21.7 billion gap.
Leahy explains that this is due in part to short-term floating-rate debt used by many investors in 2021 when purchasing properties with low interest rates. However, he clarifies that loan maturities alone do not automatically lead to distress; it is when they coincide with declining property values and limited credit availability that distress can occur.
While last year saw concerns about the office sector’s debt funding gap, this year has added multifamily into the mix as well. However, Leahy reassures readers that other sectors such as retail and industrial are not likely to experience similar issues due to their value gains and lower levels of originated debt compared to offices and apartments between 2018-2021.
The article was originally published by Connect CRE.
