At Edgewater Lending, we’re closely monitoring distressed real estate trends across the U.S.—and the data is pointing to one clear shift: a growing wave of commercial properties facing stress due to loan maturities and refinancing pressure.
Whether you work with borrowers, investors, or creditors, understanding these patterns is key to staying ahead of the next chapter in the real estate cycle.
Where We’re Seeing Elevated Activity
While distress remains localized and asset-specific, some clear hot spots have emerged:
🔹 Sunbelt Cities
Markets like Tampa, Austin, Phoenix, and Atlanta are seeing an uptick in commercial defaults—not due to market collapse, but because assets that were financed aggressively in 2020–2021 are now facing maturing debt in a tighter credit environment.
🔹 Urban Office Submarkets
In cities like Chicago, San Francisco, and Washington, D.C., office properties with leasing challenges are struggling to refinance, even at lowered valuations. Lenders are hesitant, and extensions are harder to come by.
🔹 Mixed-Use & Retail Corridors
In secondary markets, especially across the Southeast and Midwest, we’re seeing mid-size retail and mixed-use properties face pressure due to expiring bridge loans or legacy CMBS maturities.
What’s Driving the Pressure
- Rising Interest Rates: Many properties financed with short-term or interest-only structures now face refis at rates 2–4% higher than when the debt was originated.
- Appraisal Gaps: Falling valuations mean borrowers often can’t meet loan-to-value thresholds for conventional financing.
- Tighter Credit: Banks and credit unions have reduced exposure to commercial real estate, creating a void in the middle market.
Even stabilized properties are getting caught in the crunch.
What Borrowers Are Doing About It
Many owners are proactively exploring:
- Bridge financing to buy time
- Refinance alternatives outside traditional banking channels
- DIP and bankruptcy-exit loans for distressed or overleveraged assets
- Staged sale strategies to avoid distressed pricing
What This Means for Legal and Financial Advisors
If you’re working with clients who have loans maturing this year—or who are already in discussions with lenders about extensions—it’s worth evaluating their options early. The most successful outcomes we’re seeing involve early action, strategic use of bridge capital, and flexible financing partners who understand complexity.
Need a Second Set of Eyes?
We work with attorneys, fiduciaries, and borrowers across the country to provide real estate-backed capital that moves quickly and aligns with legal and financial strategy—not just underwriting formulas.
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