Commercial real estate is entering another critical year as hundreds of billions of dollars in property loans come due while borrowing costs remain elevated.

Approximately $875 billion in commercial and multifamily mortgages are scheduled to mature in 2026, according to the Mortgage Bankers Association. That represents roughly 17% of the $5 trillion in outstanding commercial mortgages tracked by the organization.

The maturities do not automatically mean $875 billion of loans will default. Many properties will refinance, sell, receive new equity or negotiate modified terms with lenders.

The challenge is that many of these loans were originated when financing was considerably cheaper.

As those loans mature, some property owners now have to refinance into a market with higher interest rates, different property values and more selective lenders.

That is creating what could become one of the commercial real estate market’s biggest financial tests of 2026.

Why $875 Billion Is Coming Due This Year

Commercial mortgages often work differently from the 30-year fixed mortgages common in residential housing.

A commercial property owner may finance a building with a loan that amortizes over many years but becomes due much sooner—often after five, seven or 10 years.

At maturity, the remaining balance generally has to be:

• Paid off

• Refinanced

• Replaced with new financing

• Restructured with the existing lender

• Covered through a property sale or additional investor capital

That system works relatively smoothly when property values are rising and refinancing is inexpensive.

It becomes more complicated when interest rates increase.

The Mortgage Bankers Association estimates that 17% of outstanding commercial and multifamily mortgage balances will mature during 2026, although the exposure varies significantly by property and lender type.

Hotel loans have one of the highest maturity shares, with about 30% scheduled to come due in 2026. Approximately 23% of industrial loans, 17% of office loans and 13% of multifamily mortgages are also scheduled to mature.

Refinancing Can Look Very Different at Today's Rates

The core problem is not simply that loans are maturing.

It is the cost of replacing them.

A property financed when borrowing costs were 3%, 4% or 5% may now have to qualify for debt at significantly higher rates.

Bisnow highlighted that tension in its August 3 discussion with Mavik Capital founder Vik Uppal, noting that long-term bond yields remain elevated and cheaper financing does not appear immediately available.

Higher rates can increase debt payments even if the size of the loan stays the same.

For commercial borrowers, the problem can become even more difficult because lenders typically evaluate whether a property's income generates enough cash flow to support its debt.

If the property has declining rents, higher vacancies, rising expenses or a lower valuation, the owner may not qualify to refinance the full existing balance.

That creates a financing gap.

The Refinancing Gap Can Force Owners to Find New Money

Imagine a property with a $20 million mortgage coming due.

Years ago, the building may have been valued high enough—and generated enough income—to comfortably support that loan.

If today's lender values the property at only $22 million and requires a substantially lower loan-to-value ratio, it may be willing to refinance only $15 million.

The owner then has to find the remaining $5 million somewhere else.

Possible solutions can include:

• Adding new equity

• Bringing in another investor

• Using mezzanine or private-credit financing

• Negotiating an extension

• Selling the property

• Returning the property to the lender

That is why loan maturities can produce financial stress even when a property has not completely failed.

The building may still have tenants and income. The capital structure simply may no longer work under today's financing conditions.

Lenders Have Already Extended Many Loans

Part of the 2026 maturity challenge stems from loans that did not originally expire this year.

During the past several years, lenders often extended maturities rather than immediately forcing distressed properties into foreclosure or sale.

Bisnow reported in late 2025 that private debt and other capital sources helped borrowers push maturities forward, contributing to a larger concentration of loans coming due later in the cycle.

That strategy is sometimes referred to as “extend and pretend.”

The phrase can be misleading because extensions are not necessarily irrational. If a property has viable long-term economics, giving the owner additional time can produce a better outcome for both borrower and lender than forcing a sale during a weak market.

But extensions cannot solve every problem indefinitely.

If the property's income does not improve, its value remains depressed or borrowing costs remain high, eventually the loan still has to be refinanced, restructured or resolved.

Not Every Part of Commercial Real Estate Is Struggling Equally

Commercial real estate is not one market.

Office towers, apartment buildings, warehouses, hotels, shopping centers and data centers all operate under very different economic conditions.

That distinction is important because discussions of a “commercial real estate crisis” can imply that every property sector faces the same level of distress.

They do not.

The Federal Reserve’s May 2026 Financial Stability Report noted that commercial real estate prices had continued to show signs of stabilization.

At the same time, individual markets and property types continue to face significant challenges.

Office properties remain particularly exposed in locations where remote and hybrid work reduced demand for space. Some multifamily properties purchased or financed during the low-rate period also face refinancing pressure as high borrowing costs collide with weaker rent growth.

Meanwhile, industrial properties, data centers and higher-quality properties in strong locations can have very different financing prospects.

The refinancing story therefore depends heavily on what the property is, where it is located, how much income it generates and how much debt sits against it.

Why Banks Are Part of the Story

Commercial real estate financing is closely connected to the banking system.

Federal Reserve research estimates that banks hold roughly half of all U.S. commercial real estate debt, with regional and smaller banks accounting for a disproportionately large share relative to their size.

That does not mean commercial real estate maturities automatically create a banking crisis.

Banks typically maintain reserves, capital and underwriting standards designed to absorb loan losses.

Federal Reserve data also show that commercial real estate charge-off rates at the largest banks remained relatively modest in early 2026.

But concentrated losses can still matter, particularly for institutions with large exposure to troubled property markets.

If banks become concerned about credit quality, they may respond by tightening lending standards, requiring more equity or becoming more selective about new loans.

That can influence credit availability beyond the specific property experiencing distress.

Why Consumers Should Care About Commercial Real Estate

Most households do not own an office tower or shopping center.

But commercial property finance is connected to the wider economy in several ways.

Banks and Credit Availability

Losses on commercial real estate loans can make some lenders more cautious.

When banks become more conservative, financing may become harder to obtain not only for property investors but also for small businesses and other borrowers.

Retirement and Investment Accounts

Commercial real estate can appear inside pension funds, REITs, mutual funds, private funds and retirement portfolios.

Problems in specific property sectors can therefore affect investors even when they do not directly own commercial property.

Local Government Revenue

Commercial properties contribute to local property-tax bases.

A prolonged decline in property values can put pressure on tax revenue, particularly in cities with large concentrations of valuable office and commercial buildings.

Jobs and Local Businesses

Office buildings, shopping districts, hotels and multifamily developments support employment ranging from construction and property management to restaurants, maintenance and retail.

Financial stress that leads to stalled projects or property closures can eventually affect those businesses and workers.

Office Buildings Remain One of the Biggest Questions

The office sector has received much of the attention surrounding commercial real estate distress.

Remote and hybrid work permanently changed how many employers use physical office space.

Some companies reduced their footprints. Others moved toward newer, higher-quality buildings while leaving older properties with elevated vacancies.

That creates a split market.

Well-located, modern office buildings with strong tenants may continue attracting capital.

Older properties with weak occupancy can face far greater difficulty refinancing.

When a lender evaluates an office property today, it is not simply comparing today's interest rate with the old one.

It is also asking whether the building's future rental income supports the debt at all.

Multifamily Properties Have Their Own Refinancing Pressure

Apartment buildings are often viewed as more defensive investments because people always need housing.

But multifamily properties are not immune to financing risk.

Some apartment buildings were acquired when interest rates were extremely low and investors expected rents to continue rising quickly.

In markets where new apartment construction increased supply, rent growth has slowed and landlords have offered concessions to attract tenants.

Federal Reserve regional reporting has noted pressure on multifamily rents and elevated vacancies in some markets.

If income falls short of earlier projections while financing costs rise, owners can encounter the same refinancing gap affecting other commercial properties.

Private Credit Is Filling Some of the Financing Gap

Traditional banks are no longer the only major source of commercial real estate capital.

Private credit funds and debt investors have increasingly stepped into financing situations that banks may consider too risky.

That can give property owners another option when traditional refinancing is unavailable.

Bisnow's August interview with Mavik Capital's Vik Uppal highlights exactly that opportunity: distressed owners may need capital to refinance while lenders may prefer alternatives to immediate foreclosure.

Private financing, however, can be more expensive.

Higher-cost capital may help keep a property operating, but it can also reduce returns and increase the amount of cash flow devoted to debt service.

The financing solves the immediate maturity problem only if the property ultimately generates enough value to justify the new capital.

The $875 Billion Number Needs Context

The size of the maturity wall sounds alarming.

But $875 billion of maturities is not the same as $875 billion of bad debt.

The Mortgage Bankers Association notes that 2026 maturities are actually 9% lower than the amount that matured in 2025.

MBA has also argued that scheduled maturities can generate additional transaction and lending activity as borrowers refinance or restructure debt.

At the same time, the Federal Reserve continues to identify refinancing as a potential source of stress if borrowers cannot replace maturing loans.

The reality lies between the most optimistic and pessimistic interpretations.

Commercial real estate is not experiencing universal collapse.

But properties carrying too much debt, weak cash flow or declining valuations are being forced to confront financial conditions that were easier to postpone when lenders were more willing to extend maturities.

What to Watch Through the Rest of 2026

Several indicators will help determine how significant the refinancing challenge becomes.

Long-term interest rates.
Lower borrowing costs could make refinancing easier. Persistently high bond yields would keep pressure on borrowers.

Property sales.
More transactions would provide clearer evidence of what commercial buildings are actually worth in today's market.

Foreclosures and delinquencies.
A sustained increase could signal that refinancing problems are becoming credit losses.

Bank lending standards.
Tighter standards could make the maturity problem more difficult even for otherwise viable properties.

Private-credit activity.
Additional nonbank capital could help refinance properties traditional lenders will not fund.

Office and multifamily fundamentals.
Vacancies, rents and operating income ultimately determine how much debt individual properties can support.

The Financial Risk Is Bigger Than the Buildings

The commercial real estate maturity wall is fundamentally a refinancing problem.

Properties financed in a different interest-rate environment are now reaching the point where old debt has to be replaced with new capital.

For strong properties, that may simply mean paying a higher rate or contributing additional equity.

For weaker properties, refinancing may expose a deeper problem: the building may no longer be worth enough—or generate enough income—to support the debt accumulated when financing was cheaper.

That is where commercial real estate stress can move beyond individual property owners.

Banks can take losses. Investors can lose capital. Local property values can decline. Projects can stall. Lending conditions can tighten.

The $875 billion coming due in 2026 therefore does not represent $875 billion of inevitable distress.

It represents $875 billion worth of financial decisions that have to be made in a much more expensive lending environment.

How successfully borrowers and lenders navigate those decisions will help determine whether the commercial real estate adjustment remains manageable—or becomes a larger problem for the financial system and economy.

See How the Economy Connects to Your Financial Life

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