Office Market Outlook: The Commercial Mortgage Impact
The commercial real estate mortgage market is top of mind today, particularly as it pertains to the office market. Looking forward to the next 24 months, over half of the US $2.9 Trillion of mortgage debt will be coming up for renegotiation, mostly with smaller and mid-sized financial institutions — and landlords and lenders will have to find compromises in order to restructure debt.
In general, property values are declining as a result of the rising cost of debt coupled with lower occupancy trends that make it challenging for building owners to demonstrate sustainable value in the short term. In many cases, lenders will ask landlords to explore options for refinancing with capital requirements to rebalance the debt-to-equity ratio.
At the same time, lenders want to avoid creating a portfolio of non-performing assets and having to reposition the properties (at steep losses) for a future sale. Therefore, agreeing to mutually acceptable terms is the likely outcome for most lenders and landlords — and from a brokerage perspective, CBIZ Gibraltar remains focused on protecting tenants.
Given the state of the market, we have been able to negotiate very favorable conditions for tenants, including rights to terminate and even contraction rights in leases that in the past would otherwise not have been possible
Learn more from CBIZ Gibraltar’s Steve Joseph in this video.
As the leading provider of integrated real estate services with a 100% commitment to advocating the interests and needs of tenants, CBIZ Gibraltar understands that no two companies are alike and works to deliver the best possible solutions for our clients. Together, we uncover the potential of your work environment, maximize human capital and map the path to critical business success.