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Multifamily real estate faces rising distress amid high borrowing costs

About $1.8T of multifamily debt is set to mature over the next decade, with up to $757B due between now and 2028, raising pressure on apartment owners.

Reported · Written up by our desk · Commercial

Multifamily apartment properties are losing favor as persistent oversupply collides with higher borrowing costs, according to Bisnow, with speakers at its National Commercial Real Estate Finance event describing distress as increasingly likely for apartment owners.

Bisnow said around $1.8T of multifamily debt is scheduled to come due over the next decade, including as much as $757B due between now and 2028, a timeline that could tighten refinancing conditions for owners.

Rialto Capital head of special situations investments Joe Bachkosky told attendees that the situation may not become as severe as the office market, but it is creating challenges for an asset class that had been among the stronger performers over the past 25 to 30 years.

Bisnow added that higher interest rates are already pressuring owners who borrowed during 2020 to 2022, when interest rates were near zero and rents rose by double digits in many Sunbelt cities.

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