The 2025 Debt Wall Is Here. What Happens Next for CRE?

In partnership with

A historic wave of commercial real estate loans is coming due.

Over $1.2 trillion in debt will mature between now and the end of 2026.

Borrowers face tighter lending standards, higher rates, slower lease-up, and stricter underwriting. Lenders face rising default risk and declining collateral values.

And while most headlines focus on the refinancing crisis, something more important is happening under the surface:

AI models, private credit, and global investors are quietly rewriting who survives this cycle, and who doesn’t.

Below is your breakdown of the winners, the losers, and the actual capital flows shaping 2025.

Office Is the Epicenter of Distress

Office loans represent the largest share of upcoming maturities and the least refinancing capacity.

Core pressures:

• Leasing velocity remains weak in major metros

• Lenders are discounting collateral more aggressively

• Operating expenses are rising faster than rents

• Hybrid work continues to weigh on long-term demand

Most troubled markets: San Francisco, Chicago, Seattle, Washington DC.

Expect more deed-in-lieu transfers, sponsor walkaways, and distressed office sales throughout 2025.

Multifamily Isn’t Immune

Multifamily remains the strongest major asset class, but refinancing risk is real.

Key headwinds:

• Higher interest costs lowering DSCR

• Insurance premiums rising nationwide

• Rent growth slowing in previously hot markets

• Bridge loans maturing with limited financing options

Class B/C properties in Texas, Arizona, Georgia, and the Midwest face the most pressure.

Industrial and Retail Are Still Holding Firm

Industrial:

• Cap rates have stabilized

• New supply is slowing

• E-commerce demand is back on a growth curve

• Absorption remains strong across Class A markets

Retail:

Grocery-anchored retail and neighborhood centers continue to outperform, with some of the strongest NOI stability in the country.

Even lenders who pulled back heavily in 2023–2024 are re-entering these categories.

AI Is Quietly Reshaping the 2025 Debt Wall

While the focus is on maturing loans, lenders and investors have adopted AI models that change how risk is measured and how refinancing decisions are made.

AI tools are being used to:

• Detect distress months before borrowers miss payments

• Evaluate rent rolls, leasing trends, and foot traffic in real time

• Stress-test DSCR, LTV, and refinance probability

• Update valuations faster during market volatility

BlackRock, Starwood, and Brookfield have rolled out internal AI dashboards to monitor portfolio health and determine which loans to refinance — and which to walk away from.

AI is directly shaping the outcomes of the 2025 refinancing wave.

Learn how to make every AI investment count.

Successful AI transformation starts with deeply understanding your organization’s most critical use cases. We recommend this practical guide from You.com that walks through a proven framework to identify, prioritize, and document high-value AI opportunities.

In this AI Use Case Discovery Guide, you’ll learn how to:

• Map internal workflows and customer journeys to pinpoint where AI can drive measurable ROI

• Ask the right questions when it comes to AI use cases

• Align cross-functional teams and stakeholders for a unified, scalable approach

Get the Guide.

How Private Equity Is Positioning for This Cycle

Private equity funds are preparing aggressively for opportunities created by the debt wall.

Main strategies:

• Preferred equity injections

• Distressed acquisitions

• Purchasing notes directly from lenders

• Bridge-to-stabilization financing with higher spreads

• Opportunistic fund deployments targeting discounted assets

AI allows investors to analyze undervalued deals, forecast cap rate scenarios, and model refinance probability at scale.

This is why capital is positioning early for 2025–2026.

Global Capital Flows Are Accelerating Into the U.S.

International investors are increasing allocations to U.S. real estate at the highest rate since 2019.

What they’re targeting:

• Multifamily in secondary high growth cities

• Industrial with long term leases

• Distressed office for repositioning

• Student housing

• Grocery anchored retail

• Data centers and infrastructure adjacent real estate

This is seen by global capital as a once-in-a-decade entry window

The Bottom Line

The debt wall is real but it’s not the collapse many headlines suggest.

It’s a reshaping.

AI is accelerating it.

Private credit is enabling it.

Global capital is positioning ahead of it.

And those who understand these shifts early will control the best opportunities of the next cycle.

Thanks for reading Mainstreet News.

See you next week.