Intelligent Investment
Debt funding gap arises in multifamily sector
Chart of the Week
October 25, 2023
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In June, CBRE Econometric Advisors published debt-funding gap estimates by sector for loans originated in the 2018-2020 period. At that time, we identified a substantial funding gap of $72.7 billion for office loans that would mature between this year and 2025. A funding gap did not exist for other property sectors.
We’ve updated our funding gap estimates in light of the dramatic run-up in yields since June. The funding gap for office has now increased to $82.9 billion, and a $21.7 billion funding gap emerged for multifamily properties.
We also added 2021-vintage loans — a big year for multifamily debt issuance — to our analysis. This balloons the funding gap for loans coming due between now and 2026 to $112.8 for office and $44.54 billion for multifamily. The volume of loans maturing, paired with rising cap rates, signal distress ahead for office and multifamily properties.
Figure 1: Debt-funding Gap by Maturity Year by Sector ($ Billions)
Source: CBRE Econometric Advisors.
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Dennis Schoenmaker, Ph.D.
Executive Director & Principal Economist, CBRE Econometric Advisors
