Lenders, servicers, and investors are seeing a surge in commissioning of valuation assignments covering topics such as refinance appraisals.
Commercial real estate is entering a moment of structural recalibration. A historic wave of loan maturities is converging with a capital markets environment defined by higher interest rates, tighter credit, and shifting fundamentals.
What was once a predictable refinancing cycle has become a pressure test of asset performance, valuation assumptions, and the broader market’s resilience.
This shift is not only reshaping investment strategies but is also redefining the role of the real estate appraiser as a strategic partner in navigating uncertainty.
The scale of upcoming maturities is unprecedented. According to S&P Global Market Intelligence, approximately $950 billion in commercial mortgages matured in 2024, with the total rising to nearly $1 trillion in 2025 and ultimately peaking at $1.26 trillion in 2027.
The Mortgage Bankers Association reports that $957 billion, or 20% of all outstanding CRE mortgages, will mature in 2025, reflecting a growing backlog of loans pushed forward through extensions.
Meanwhile, nearly $936 billion in CRE loans are now scheduled to mature in 2026, as lenders continue to extend near-term maturities into later years.
Refinancing a Consequential Risk
This maturity wall is put up against a capital markets environment where interest rates remain materially higher than during the last refinancing cycle, lenders have tightened credit standards, and NOI volatility persists across office, retail, and hospitality.
The result is a widening gap between existing loan balances and new loan proceeds, making refinancing one of the most consequential risks in today’s market.
The refinancing challenge is no longer theoretical. It shows up in real transactions, lender behavior, and asset-level outcomes. Negative leverage has become the norm with borrowing costs now exceeding cap rates in many markets, eroding returns and compressing the debt service coverage ratio (DSCR).
Equity gaps are emerging. Borrowers are increasingly required to inject fresh equity, sometimes substantial amounts, to refinance maturing debt.
Extensions and modifications are proliferating, with lenders offering short-term extensions, partial paydowns, and structured workouts. These accommodations almost always require updated valuations.
Fitch Ratings projects that CMBS delinquency rates will rise from 2.25% in late 2023 to 4.50% in 2024 and 4.90% in 2025, primarily driven by maturity defaults and refinancing challenges.
Office assets are particularly exposed. Trepp reports that the office CMBS delinquency rate has climbed to 8.09%, more than 300 basis points higher than a year earlier. The sector is experiencing the most dramatic reset in valuations:
According to Commercial Search, Class A & A+ buildings declined by 22% in 2024, part of a cumulative 47% decline since 2019. High-end assets are struggling due to high vacancies and expensive financing.
Class B buildings declined by 3% in 2024, bringing the cumulative decline from 2019 to 20%. These lower-tier buildings were already discounted, so valuations fell less.
According to Atlantic Commercial Group, average office sale prices fell 11% in 2024, and dropped from $196/sq ft (2023) to $174/sq ft (2024). This continues the downward trend from 2023’s 24% decline.
According to Commercial Observer, discounted office sales doubled in 2024, which indicates distressed sellers and limited buyer appetite.
For Appraisers: Greater Demand, Complexity, Scrutiny
These declines directly impact refinancing feasibility, loan-to-value ratios, and lender willingness to extend or modify loans.
The new reality for appraisers is greater demand, greater complexity, and greater scrutiny. As refinancing risk rises, appraisal work is no longer a back-office formality. It has become a central input in risk management, capital allocation, and regulatory compliance.
Lenders, servicers, and investors are seeing a surge in commissioning of valuation assignments covering topics such as refinance appraisals, impairment analyses, quarterly mark-to-market updates, and portfolio-level stress tests. Valuation frequency is increasing as stakeholders seek real-time clarity.
Additionally, underwriting assumptions are under the microscope. Appraisers must now justify assumptions with greater rigor, including higher exit cap rates, slower lease-up timelines, tenant rollover risk, market-appropriate concessions, and elevated credit loss expectations. Minor adjustments can materially shift value, making transparency essential.
Scenario analysis is becoming standard practice. Clients increasingly expect base-case, downside, and severe downside scenarios, DSCR and loan-to-value (LTV) sensitivity tables, and break-even occupancy and rent analyses. Valuation is evolving from a single number to a range of outcomes.
The concept of Highest and Best Use (HBU) is not being rewritten, but the reporting requirements and the depth of analysis expected from appraisers are changing significantly. These changes are part of the broader Uniform Appraisal Dataset (UAD) 3.6 overhaul by Fannie Mae and Freddie Mac, which becomes mandatory in November 2026.
‘What Should This Building Be?’
For office assets, appraisers must evaluate conversion feasibility, demolition value, land value vs. improved value, and functional and economic obsolescence.
Another way of putting it is, “The question is no longer ‘What is this building worth?’ but ‘What should this building be?’”
As values decline and refinancings fail, appraisals are more likely to be challenged, reviewed by regulators, and used in legal disputes. This makes documentation, support, and defensibility more crucial than ever.
The refinancing wave is forcing the appraisal industry to confront uncomfortable truths about asset performance, valuation assumptions, and capital availability. But it also elevates the appraiser’s role as a strategic partner in navigating uncertainty.
In this environment, valuation is not merely a compliance requirement; it is a forward-looking decision-making tool.
The question for market participants is no longer simply, “What is the value today?” It is: “How does value behave under stress, and what does that mean for refinancing, risk, and long-term strategy?”
Those who understand this shift and adapt their processes accordingly will be better positioned to navigate the next phase of the cycle.