Office building owners: Brace for hefty debt repayments in 2024.

The National Desk reports that office building owners in the U.S. are facing significant debt repayments in 2024, posing a risk to the economy. Data from the Mortgage Bankers Association shows that there are currently around $117 billion in commercial mortgages tied to office buildings that either need to be repaid or refinanced this year. However, a large portion of that number is at risk of defaulting. The article highlights several factors contributing to the financial trouble faced by office building owners. Firstly, many owners took out loans when interest rates were much lower than they are now, leading to higher monthly payments. Additionally, commercial mortgages are typically interest-only, meaning that the original price must still be paid at the end or refinanced to start the process over. The COVID-19 pandemic also played a role in the office building owners’ financial difficulties, as widespread office vacancies occurred due to businesses downsizing their office spaces while employees worked from home. Estimates suggest that office space use is currently only around half of pre-pandemic levels. The article notes that there are 605 office buildings with expiring mortgages, and Moody’s Analytics predicts that owners of 224 of these buildings will struggle to refinance. The cities with the most commercial mortgage loans expiring this year are Manhattan, Houston, Los Angeles, San Francisco, Sunnyvale, and Chicago. Furthermore, Chicago, New York City, and San Francisco all have office vacancy rates of more than 20%. Overall, the article paints a concerning picture of the financial challenges faced by office building owners and their potential impact on the U.S. economy.