For the last two years, many lenders, brokers, analyst firms, and other experts have warned about a coming CRE debt maturity wave. JLL has sized this wave and estimates that the total due by the end of 2025 is $1.5 trillion and that about a quarter, or $375 billion, will have a hard time refinancing.

The basics have faced the industry for years now. Through the pandemic, two events happened. One, the Federal Reserve pushed an easy monetary policy to increase liquidity, and the federal government pumped rescue money into the economy, both at rates never before seen. Two, inflation quickly rose, as classical economics would suggest, and the Fed boosted interest rates to battle it.

Higher borrowing rates were a shock even though they weren't out of keeping with historical norms. However, CRE borrowers recently experienced ultra-low rates, as Fed Chair Jerome Powell has described them. The differential was sudden and high. Transactions fell and, as a result, so did the valuations of many properties.