Looking at latest data available, it has been projected that a staggering $4 trillion in loan maturities is set to come due in the next few years. This significant amount encompasses various types of real estate -mainly office buildings, hotels, and apartments. Given the collapse of Silicon Valley Bank in 2023, it is speculated that community and regional banks will cease in lending on certain areas in the commercial real estate sector. With banks holding almost half of the maturing volume this correlated to an increase in distressed assets.

The forthcoming wave of loan maturities poses a considerable financial challenge for borrowers, boosting repayment of these loans in full or having to refinance them before the maturity dates. Given the current market environment, this may force some property owners to refinance at a high-interest rate. Failure to address these maturing loans in a timely and strategic manner could lead to potential financial strain, credit rating downgrades and even defaults in some cases.

To navigate this looming financial hurdle, borrowers are advised to proactively engage with lenders, explore refinancing options, and devise comprehensive repayment strategies. Additionally, seeking professional financial advice and closely monitoring market conditions can help borrowers make informed decisions regarding their outstanding loan obligations.

Office Values – A Turning Point For Office

The commercial real estate market is experiencing a seismic shift as office values plummet by as much as 40 percent. (Markets Insider.com) The markets that are mostly affected are in the Texas metro areas (Austin, Houston, Dallas). The San Francisco Bay Area and Denver and Boulder, Colorado are also high on the list with a remote work model. (Commercial Edge.com) This sharp decline in office property values is sending ripples through the industry, impacting investors, landlords, and tenants alike.

The substantial drop in office values can be attributed to a confluence of factors, including the rise of remote work trends, changing business dynamics, and economic trends. With more companies embracing virtual work or hybrid arrangements and reevaluating their office space needs, the demand for traditional office spaces has significantly waned, leading to a surplus of inventory and downward pressure on property values. The appetite for office remains low and there may be as much as 1 billion SF of unused office space by the end of the decade according to a 2023 report by Cushman & Wakefield. If the market is in decline with growing vacancy, it is critical that the building is in the most advantageous position to weather the storm, or it needs to convert rapidly while the value remains high. (Valbridge Property Advisors)

Investors are grappling with the harsh reality of diminishing asset values and shrinking returns on their office holdings. Landlords are facing challenges in attracting tenants and maintaining rental income levels, while tenants are seeking flexible lease terms and cost-effective solutions. Class A office space will become more in demand as employers are requiring a hybrid back-to-work mandate. Companies will focus on quality and perhaps a smaller footprint with hybrid scheduled employees. This leaves Class B and C office spaces to be the main candidates for conversion to other uses.

As the market undergoes this period of adjustment, stakeholders are prompted to reassess their investment strategies, explore innovative uses for office spaces, and adapt to the evolving needs of tenants in a rapidly changing environment. Collaboration, creativity, and adaptability will be key as the industry navigates the uncertain terrain of diminished office values and seeks to unlock new opportunities for growth and resilience in the years ahead.

Conversion of Office Buildings for Alternative Uses: A Look at Healthcare Facilities and Hotels

In recent years, there has been a growing trend of repurposing office buildings for alternative uses such as healthcare facilities and hotels. As the needs of communities evolve, unused office spaces are being transformed into innovative spaces that serve different purposes. This allocates an outlet for the office segment allowing landlords/investors with an efficient solution to meet changing demands. While this applies to mainly class B and C office, there is growing opportunity to accommodate the needs of the hospitality and healthcare sectors.


Repurposing office buildings into hotels is a creative way to breathe new life into underutilized spaces. With the tourism and travel industry enjoying the release of pent-up demand following the pandemic, there is growing demand for unique accommodations in various locations. Converting office buildings into hotels offers a cost-effective solution for developers looking to create upscale lodging options in prime areas.

A notable hotel conversion in the works is Rockefeller Center to be completed in 2026. Aspen Hospitality and New York developer Tishman Speyer will convert 10 floors into a 130-room luxury hotel targeted for business and leisure travelers. The hotel will be located above the NBC “Today” show studios. This is a second installation for Aspen Hospitality as property owners reconsider the best use for office spaces. Rockefeller Center is one of 14 office-to-hotel projects underway that are planned across the country. (Hoteldive.com) While the office portion of the complex is 93 percent leased, it’s only occupied 50-60 percent during its busiest times, according to Tishman. (therealdeal.com) The new anticipation of what’s going on at Rockefeller Center will attract the masses with an array of retail, cultural art, and restaurants. This will be a destination tourists and corporate customers will want to visit, a sign of the times.

One of the key benefits of converting offices into hotels is the existing infrastructure that can be repurposed. Office buildings are often equipped with mechanical, electrical, and plumbing (MEP) systems that can be modified to meet the requirements of a hotel. The open floor plans and large windows of office buildings also lend themselves well to creating spacious and stylish hotel rooms.

Central locations of many office buildings make them ideal for hotels, as they are often situated in bustling urban areas with easy access to public transportation, restaurants, and attractions. By converting office buildings into hotels, developers can tap into the growing hospitality market while minimizing the environmental impact of new construction.

Healthcare Facilities

Repurposing office buildings for healthcare facilities is another innovative way to address the increasing demand for medical services in communities. With rising healthcare costs and the growing boomer population, we are facing a “silver tsunami” which represents the largest surge of retirement-age Americans in history. It’s reported that 44 percent of baby boomers are at retirement age and millions more are soon to join them according to the Census Bureau. Due to the need of care, repurposing office buildings can provide a cost-effective solution for expanding healthcare services in urban and suburban areas.

Office buildings offer ample space that can be transformed into various medical offices healthcare facilities, such as medical clinics, dental offices, rehabilitation centers, and urgent care clinics. Medical offices are generally more viable in proximity to hospitals, medical centers, or other existing medical facilities, including imaging centers and labs. (Valbridge) The flexibility of office layouts allows for the creation of specialized treatment rooms, waiting areas, and administrative spaces that cater to the specific needs of different healthcare practices.

Furthermore, the proximity of office buildings to local communities makes them convenient locations for healthcare facilities. Patients can easily access medical services without having to travel long distances, reducing barriers to care. Repurposing office buildings for healthcare also promotes the revitalization of neighborhoods by bringing essential services closer to residents.

Additionally, repurposing office buildings for healthcare facilities can help alleviate the strain on existing medical facilities and hospitals, especially in areas with limited healthcare infrastructure. By converting office spaces into healthcare facilities, communities can improve access to quality care and address gaps in healthcare services.

Repurposing office buildings for alternative uses such as hotels and healthcare facilities presents unique opportunities to transform underutilized spaces into vibrant and essential establishments. This also allows an opportunity to recapture lost income on a long-term investment. By reimagining the function of office buildings, developers, and communities can create innovative solutions that meet the evolving needs of modern society. Whether it’s offering upscale accommodations for travelers or expanding access to healthcare services, repurposing office buildings is a sustainable and effective way to enrich our urban landscapes.

“We love the challenge of the unknown or uncharted,” says Ed Steere, Managing Director, Planning Marketing Analysis, Valbridge Property Advisors | Baltimore Washington Metro. “We can answer questions such as how to convert an historic office building into a hotel and apartments, how many hotel rooms of what type can be absorbed into a community, and what is the best site for a healthcare facility,” says Steere of the interesting feasibility studies he works on ahead of consideration of conversions to alternative property uses. 

Valbridge Property Advisors works with developers, lawyers, engineers, and architects to create a viable site use and also justify the components of the site with market insights. We can be involved at the concept stage of development and help to shape the site and community and further the vision of the developer, landowner, and municipality. Contact our team to get started early on a market analysis so our experts can help define the most viable use and also guide the site design to maximize ROI.