Loans for office buildings

The short version

Office financing is a tenant-and-lease exercise. The same building can be a bank loan, a life company loan, a CMBS loan or a bridge loan depending on occupancy, rollover and the tenants’ credit.

Building profile	First call	Also price
Well-leased, long WALT, strong tenants, good location	Life company	CMBS conduit, bank
Smaller suburban building, local tenants	Bank, credit union	DSCR loan on small buildings
Single tenant, rated, long lease	Credit tenant lease	Life company
Large asset, institutional sponsor	SASB, CMBS	Life company at low leverage
Vacancy, leasing up, or a maturing loan that will not refinance	Debt fund, bridge	Bank with an extension, mezzanine or preferred equity to fill a gap
Medical tenants	See medical office

Programs ranked for a multi-tenant office building

Rank	Program	Wins when	Loses when
1	Bank	Local relationship, smaller loan, sponsor with deposits	Recourse; bank is near its CRE concentration screens
2	Life company	Strong rent roll, low leverage, long fixed rate	Commodity or older buildings, secondary markets
3	CMBS conduit	Non-recourse at moderate leverage, interest-only	Large rollover; servicer control after a trigger
4	Debt fund	Transitional plans, maturing loans, higher leverage	Cost, floating rate, extension tests
5	Bridge	Smaller transitional deals, speed	Same as debt fund at smaller sizes
6	SASB	Large trophy or institutional assets	Small and mid-size buildings

What office underwriters focus on

• Weighted average lease term (WALT) and rollover by year. The single biggest driver of office proceeds. Rollover in the first years of the loan triggers reserves or a lower loan.
• Tenant credit and concentration. One tenant carrying much of the rent concentrates risk; lenders read its financials and the lease’s termination options.
• Re-leasing cost. Tenant improvements, leasing commissions and free rent for every space that rolls. Lenders underwrite an ongoing reserve per square foot plus specific rollover reserves.
• Market vacancy and sublease space. Sublease availability in the building or submarket is treated as competing supply.
• Physical occupancy. A floor that is leased but empty is a renewal risk, and lenders ask about it.
• Building class and capital needs. Older systems, elevators and roofs; energy code upgrades. C-PACE can fund qualifying upgrades, with the senior lender’s consent.
• Cash management. Lockbox and cash sweep triggers tied to DSCR, debt yield or a major tenant’s notice to leave.
• Conversion potential. For older buildings, lenders increasingly ask what the site is worth for another use. Conversion is a construction loan, not an office loan.

Sizing example (illustration)

An illustration, not a quote. An 80,000 square foot suburban office building valued at $17,000,000 with $1,360,000 of NOI (an 8.0% cap rate). Assumed lender tests: 60% LTV, 1.35x DSCR on a 25-year schedule at an illustrative 7.25%, 11% minimum debt yield, and an ongoing leasing reserve of $2.50 per square foot ($200,000 a year) deducted from NOI. These are assumptions for the example, not program limits.

Test	Before the reserve	After the $200,000 reserve
NOI used	$1,360,000	$1,160,000
LTV (60%)	$10,200,000	$10,200,000
DSCR (1.35x, 8.67% constant)	$11,615,000	$9,907,000
Debt yield (11%)	$12,364,000	$10,545,000
Loan	$10,200,000 (LTV binds)	$9,907,000 (DSCR binds)

The reserve alone moved the binding test and cut about $293,000. Add a large tenant rolling in year two and the lender may hold back part of the proceeds until it renews. Model your own deal in the debt yield calculator, and if you are refinancing a loan that was larger, size the shortfall with the refinance-gap calculator.

The maturity wall is office-heavy

Measure	Reading
Office loans in private-label CMBS reaching hard maturity in 2027 (Trepp)	$22.2 billion4 of $61.1 billion4
Share of each property type’s mortgage balances maturing in 2026, all lenders (MBA)	Hotel 30%, industrial 23%, office 17%, health care 15%, multifamily 13%5
CMBS office delinquency, September 2026 (Trepp)	12.16%3
Bank non-owner-occupied commercial property loans noncurrent, Q2 2026 (FDIC)	1.42% of bank non-owner-occupied commercial property loans noncurrent6

Office originations are recovering from a low base: Retail up 61%, office up 47%, hotel up 19%, multifamily up 8%, industrial up 6%, health care down 19%⁷ (MBA, Q2 2026 versus Q2 2025). That means capital is available, but at today’s values. If your loan is maturing, start most of a year ahead; see refinancing a maturing balloon loan.

Filling a refinance gap

When the new senior loan is smaller than the old one, the options in rough order of cost:

1. Equity paydown from the sponsor or a new partner (see partner buyout financing).
2. A loan extension or modification with the current lender, often with a paydown and a cash sweep.
3. Mezzanine debt behind the senior loan, if the senior lender allows it.
4. Preferred equity, which sits in the ownership entity instead of behind the mortgage.
5. A bridge or debt fund loan that refinances the whole stack to give time to lease.

The blended rate calculator shows the all-in cost of senior plus mezzanine.

Programs to avoid

• Agency, FHA and DSCR multifamily programs. Not eligible for office.
• CMBS on a building with near-term rollover. Cash management traps your cash when you most need it for leasing.
• Hard money on large office deals. Short-term, full recourse and expensive; a debt fund is usually cheaper at that size.