Office Debt Refinancing Faces a $131B Shortfall

The US office sector is staring down a $131B refinancing gap through 2028, representing nearly 25% of all office debt originated between 2017 and 2023, according to CBRE. 

The shortfall, driven by lender forbearance and the extend-and-pretend strategy, raises concerns about rapidly rising office distress—especially for Class B and C properties, per GlobeSt.

A Growing Crisis

CRE’s extend-and-pretend approach may have delayed distress in the office sector, but CBRE’s latest analysis suggests this practice has masked a massive refinancing gap.

In fact, by 2028, CBRE expects that $131B in office loans will need refinancing—a funding shortfall that could greatly accelerate distressed sales.

Notably, CBRE’s estimate of office distress relied upon:

• Mortgage Bankers Association data to determine annual office loan volumes
• Loan-to-value (LTV) ratios from CBRE’s closed transactions
• Projected property values based on CBRE’s value index
• A 25-year amortization model at 3.5% interest to estimate outstanding debt levels

At Higher Risk

Class B and C properties face the greatest refinancing challenges, as lenders and investors hesitate to deploy capital into assets with uncertain long-term value.

While some CRE loan portfolios have avoided steeper discounts of 5% to 10%, office assets—especially lower-tier properties—may not benefit from the same investor demand.

What’s Next?

As the 2025–2028 refinancing cycle unfolds, office property owners will need creative solutions to secure capital and navigate this mounting debt crisis. CBRE predicts a rise in office distress sales as lenders grow reluctant to extend delinquent loans.

For investors, this presents a window of opportunity to target distressed office assets—especially those under greater refinancing pressure.