Commercial real estate enters new pricing reality as extend and pretend strategy ends. Loan extensions have masked refinancing challenges for two years, but higher interest rates and slower income recovery are forcing actual price discovery. As of March 2026, performing and non-performing matured balloon loans represent significant market share alongside foreclosures, signaling a shift toward restructurings and selective sales. Office assets face particular pressure due to misaligned capital structures from lower-rate originations. Lenders are increasingly unwilling to grant extensions, instead requiring additional equity or pursuing asset sales at maturity. Price discovery is emerging through selective transactions rather than broad distress, with outcomes diverging sharply by asset quality.
