Trepp Research: Changing Tenant Needs Reshape the Recovering Office Market

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Trepp has published a new piece of research focusing on office loans in CMBS and how their current landscape has forced borrowers and owners to adapt.

Maturing Office Loans in CMBS

Strengthening office market fundamentals and lower cap rates should help borrowers that need to refinance maturing loans.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, has published new research on the commercial real estate office property sector that highlights how the landscape of offices and workplaces have altered and what this means in the world of CMBS.

“With the pervasion of smartphones, laptops, and tablets, the 21st century workplace is no longer confined to leasable office space”, said Susan Persin, Senior Director of Research at Trepp. “The office sector’s recovery hinges on the location of its properties more so than the recovery of other property sectors. Markets with strong office-related job growth, such as New York and San Francisco have forced upward pressure on rents and seen accelerated recovery.”

The Trepp report features historical performance breakdowns for office loans in CMBS, as well as occupancy, issuance, and amortization totals for the property type. Delinquency rates for the sector have fallen considerably since their peak of almost 10.5% in 2012 to 5.9% in June 2015.

One of the factors most important to the continued growth of the office sector is the ability for loan borrowers to refinance their mortgages when they mature. With the “wall of maturities” unleashing over $300 billion in maturing CMBS loans from now until 2017, the market will see a whopping $96.3 billion of that total come from maturing office loans. The office sector now represents the majority of loans maturing between now and 2017.

“Strengthening office market fundamentals and lower cap rates should help borrowers that need to refinance maturing loans, though there will be a lot of volume to digest after 2016”, adds Persin. “If areas that have been slower to recover can incorporate features to appeal to today’s tenant, occupancies and property values could increase and make refinancing an easier process.”

A complimentary copy of the report can be downloaded at For daily CMBS and commercial real estate commentary, follow @TreppWire on Twitter.

About Trepp LLC
Trepp, LLC, founded in 1979, is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency and investment performance. Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by dmgi, a division of the Daily Mail and General Trust (DMGT).

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