Earlier this year in January , economists from the International Monetary Fund claimed that commercial real estate prices had fallen at the steepest pace in more than 50 years . As we now approach the fourth quarter here in 2024 , the price drops have escalated and only worsened for property owners . Now , we might be seeing the worst commercial property price declines in U . S . history .
Approximately 20 %, or $ 929 billion , of the $ 4.7 trillion dollars ’ worth of outstanding commercial mortgages owed to lenders and investors may balloon or become all due and payable by the end of 2024 , as per the Mortgage Bankers Association ’ s 2023 Commercial Real Estate ( CRE ) Survey of Loan Maturity Volumes .
Between 2024 and 2028 , upwards of $ 2.81 trillion in commercial loans are scheduled to come due and need to be paid off or refinanced , according to Trepp . Within this same analysis provided by Trepp , they project that more than $ 533 billion will balloon or come due in 2025 . The largest commercial mortgage holders for these commercial mortgages coming due are regional banks and thrifts
that hold over half of these maturing loans through 2028 .
Commercial Real Estate Trends
Let ’ s take a look at both positive and negative commercial property trends across the nation in recent years :
• The estimated total dollar value of commercial real estate was $ 22.5 trillion as of Q4 2023 , which makes it the fourthlargest asset market in the nation following stocks or equities , residential real estate , and Treasury securities . ( Federal Reserve ’ s April 2024 Financial Stability Report )
• By 2050 , commercial building floor space is expected to reach 124.3 billion square feet , a 33 % increase from 2020 . ( Center for Sustainable Systems , University of Michigan )
• 72 % of commercial buildings in the U . S . are 10,000 square feet or smaller . ( National Association of Realtors )
• The typical length of a building lease in the U . S . is three to 10 years . ( DLA Piper )
• Approximately 69 % of all commercial buyers in the U . S . need financing to purchase properties . ( National Association of Realtors )
• As of July 2024 , the national office vacancy rate reached a whopping 20.1 %. This was the very first time ever that the U . S . vacancy rate surpassed 20 %. ( CommercialEdge )
• In 2024 , the U . S . apartment construction industry is expected to break a new alltime record for apartment units delivered with well over 500,000 units completed , which is 30 % higher than back in 2022 . ( Fannie Mae )
• An estimated onethird of industrial space in the US is more than 50 years old . ( NMRK )
• The Inland Empire ( Riverside and San Bernardino counties ) in California had
averaged an incredibly low 1.2 % vacancy rate for industrial space in 2021 and / or 2022 . ( Commercial Edge )
• However , vacancy rates for industrial properties in the Inland Empire skyrocketed to 6.8 % by Q1 of 2024 , a 400basis point vacancy rate increase compared to 2023 . The Inland Empire now has the second highest vacancy rate for industrial properties on the West Coast , behind only Phoenix . ( Kidder Matthews )
• Nationally , the industrial real estate vacancy rate reached 6.1 % in the first half of 2024 . ( CommercialEdge )
• For every $ 1 billion of growth in the e commerce sector , it requires an extra 1.2 million square feet of new warehouse space . ( Prologis )
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