Bay Area Commercial Mortgage Maturities: The Wall Finally Came Due

Bay Area commercial mortgage maturities are the single biggest story in Northern California real estate this year, and most borrowers are still treating it like somebody else’s problem. It’s not. If you own commercial property in San Francisco, Oakland, San Jose, or anywhere in between, and your loan was written between 2015 and 2021, there is a very good chance your maturity date is circled on a lender’s calendar right now. Michael Schwartz has been arranging commercial debt since 1996, and I will tell you plainly: the 2026 maturity picture is unlike anything I’ve worked through. Not worse. Different. And different is where borrowers either get hurt or get ahead.

The $875 Billion Wall, and the Bay Area’s Slice of It

Start with the national number because it frames everything. The Mortgage Bankers Association counts roughly $875 billion of commercial and multifamily mortgages coming due in 2026. That’s 17% of the $5 trillion in outstanding debt. Down about 9% from the $957 billion scheduled in 2025, which sounds like relief until you understand why the number shrank. Lenders stopped extending. For three years, the whole industry played extend-and-pretend. Kick the can, hope for lower rates, revisit next year. 2026 is the year the can stopped rolling.

Break down maturities by property type, and you’ll see who’s sweating. About 30% of hotel loans nationally come due this year. Around 23% of industrial. 17% of the office. 13% of multifamily. Now lay that over the Bay Area, where office makes up a bigger slice of the loan stock than almost any metro in America, and you understand why San Francisco borrowers are getting more phone calls from their special servicers and relationship bankers than borrowers in Phoenix or Nashville. The wall is national. The pressure is local.

The San Francisco Commercial Real Estate Market Is Two Stories at Once

Here is what makes this cycle strange. The San Francisco commercial real estate market is simultaneously one of the most distressed office markets and one of the hottest recovery stories in the country. Both things are true at the same time. Which story your building belongs to determines what your refinance looks like. Maybe whether you get one at all.

The office story: from left for dead to leading the nation

San Francisco office vacancy peaked at north of 34%, and half the country wrote the obituary. Then artificial intelligence happened to this town in a big way. Vacancy has fallen roughly five percentage points in a single year, the largest improvement of any market in America, sitting now in the high-20s and dropping. First-quarter leasing volume was the strongest this market has seen since 2000. Net absorption has run positive for multiple consecutive quarters for the first time since 2018, and the quarterly gains are the biggest since 2019.

Who’s doing the leasing? AI companies account for roughly 30% of all leasing activity since 2023 and the overwhelming majority of the net absorption. Anthropic has grown past a million square feet downtown. OpenAI holds about a million square feet across Mission Bay and beyond. Venture capital poured roughly $134 billion into San Francisco companies in 2025 — better than a quarter of every venture dollar invested on the planet, landing in one city of 47 square miles. And here’s the kicker: there is essentially zero new office construction in the pipeline. Demand rising, supply frozen. You do not need Michael Schwartz to draw you the chart.

But — and this is the part that matters for your loan — the recovery is not spread evenly. Its concentrated. Trophy and well-located Class A around Mission Bay, the South Financial District and the AI corridor is getting leased, recapitalized and fought over by institutional money that wouldn’t touch this town two years ago. Commodity Class B and C in the wrong location is still fighting for every tenant. Lenders know the difference down to the block. Your appraiser does too.

Multifamily, industrial and the rest of the Bay

Multifamily is the quiet good news. Only about 13% of apartment loans mature nationally this year, and Bay Area apartments sit on the strongest refinancing footing of any asset class here. The housing shortage never went anywhere, rents have firmed, and agency capital — Fannie Mae and Freddie Mac — is open, liquid and pricing aggressively for stabilized deals. If you own apartments with a maturing loan, you have options. Real ones.

Down in Silicon Valley the story is industrial-strength. Valley office vacancy has compressed to around 14%, the best in the Bay Area, with Sunnyvale dipping under 10%. The AI expansion is flowing south — big campus commitments in Mountain View and Sunnyvale from the same names driving San Francisco. The East Bay is the laggard. History says Oakland’s recovery runs 15 to 21 months behind San Francisco’s, and this cycle looks no different. If your East Bay office loan matures this year, you are refinancing into the trailing edge of the recovery. That doesn’t mean you can’t get done. It means you plan for it, you don’t hope through it.

Extend and Pretend Is Over. Here’s What Replaced It.

The single biggest behavioral shift I’ve seen from lenders this cycle: extensions fell off a cliff in 2025, and they keep falling. Lenders want resolution now. Refinance, sell, restructure, or hand back the keys — pick a lane. The good news buried in that tough talk is that the money to resolve it actually exists. Industry forecasts project commercial mortgage originations will climb from roughly $634 billion in 2025 to $806 billion this year. Banks are lending again. CMBS reopened and is competitive. Debt funds are everywhere. Capital is not the problem in 2026.

Underwriting is the problem. Every lender at my table wants the same three things: real cash flow, honest leverage, and a sponsor who shows up prepared. The days of a lender squinting at a pro forma and calling it a day are gone, and frankly, good riddance. Deals get done in 2026. Marginal deals dressed up as strong deals do not.

The Math You’re Refinancing Into

Let’s talk numbers, because your maturing loan was priced in a different world. The Fed paused in January at a target range of 3.50% to 3.75% after three rate cuts in late 2025. SOFR sits near 3.60%. The 10-year Treasury has been stuck in the mid-4s and recently pushed toward 4.60% — the long end of the curve simply refuses to cooperate, which is why fixed-rate money hasn’t come down the way borrowers keep expecting. If your 2016-vintage loan carries a 4% coupon, today’s stabilized permanent money in the mid-5s to low-6s is going to feel like a punch. Here’s roughly where programs are pricing:

Program	Typical 2026 Pricing	Best Fit
Agency (Fannie/Freddie)	Treasury + tight spreads, most competitive money out there	Stabilized apartments
Bank / credit union	Mid-5s to mid-6s, relationship-driven	Strong sponsors, lower leverage
CMBS	Treasury + 200 to 275 bps, non-recourse	Stabilized assets, primary markets
Debt fund / bridge	SOFR + 350 to 600 bps	Lease-up plans, transition stories
SBA 504	Below-market fixed, high leverage	Owner-occupied buildings

Now here’s the truth nobody leads with: for most maturing Bay Area loans the rate is not the real problem. The proceeds are. At today’s coupon rates, the same net operating income supports a smaller loan than it did in 2019 because debt service coverage and debt yield tests bind first. The distance between your old balance and your new maximum proceeds is the refinancing gap, and closing it is the actual work of 2026. Cash-in refi. Mezzanine or preferred equity behind a smaller senior. A bridge loan that buys you 24 months of lease-up before permanent debt. Or a sale into a market where, for the first time in years, institutional buyers are actually bidding San Francisco. Every one of those paths works for somebody. None of them work under a three-week deadline.

The 12-Month Maturity Playbook

What I tell every borrower who calls Financial Compound with a maturity on the horizon. Start twelve months out. Not ninety days. Twelve months.

One. Read your own loan documents. You’d be amazed. Know your exact maturity date, whether you hold contractual extension options and what tests they require, and what your prepayment language says. Half the leverage in a maturity negotiation is knowing your paper better than the lender’s asset manager knows it.

Two. Get honest about NOI and value. Not the value you need. The value a lender’s appraiser will land on, in this market, on your block. Build the refinance around that number and every surprise after is a pleasant one.

Three. Fix the fixable. A lease renewal signed, a vacant suite filled even at a modest rent, deferred maintenance handled — every one of those moves proceeds more than arguing with an underwriter ever will.

Four. Run the whole market. Bank, agency, CMBS, life company, debt fund. Spreads for the identical deal vary wildly between capital sources right now, wider than I’ve seen in years. One quote is not a market. Five quotes is a market.

Five. Watch the curve and lock smart. A 25 basis point move in the 10-year between term sheet and rate lock changes your economics for a decade. We track the New York Fed’s SOFR data and the Federal Reserve’s H.15 release daily for exactly this reason, and I walked through the whole index-plus-spread machinery in our 2026 commercial mortgage rates guide if you want the full picture.

Real example from this spring. Two borrowers, both with maturing loans on Peninsula properties, similar in size and vintage. Borrower one called us eleven months out. We repositioned the rent roll, ran six lenders, locked a permanent loan two weeks after a favorable dip in the 10-year. Borrower two called with 75 days left on the clock. He got a deal done — but it was a bridge loan at SOFR plus a number he didn’t love, because time is leverage and he had spent all of his. Same market. Same year. A lot different outcome.

Frequently Asked Questions

How much commercial real estate debt matures in 2026?

Roughly $875 billion nationally, about 17% of all outstanding commercial and multifamily mortgage debt, per the Mortgage Bankers Association. Another $652 billion follows in 2027, so the refinancing wave runs for years, not months.

Is a San Francisco office building still refinanceable in 2026?

Yes — selectively. Well-leased, well-located buildings are getting refinanced and even recapitalized by institutional capital as the AI-driven recovery pushes vacancy down. Commodity space in weaker submarkets usually needs a bridge loan, fresh equity, or a repositioning story before permanent debt makes sense.

What happens if my property doesn’t qualify for a full refinance?

You close the gap. Common tools include a cash-in refinance, mezzanine debt or preferred equity behind a smaller senior loan, or a bridge loan that carries the property through lease-up until the numbers support permanent financing. The earlier you start, the more of these tools stay on the table.

When should I start working on a maturing commercial loan?

Twelve months before maturity. That window lets you fix the rent roll, run the full lender market, and time your rate lock — instead of accepting whatever one lender offers under deadline pressure.

Will maturing loans force a wave of Bay Area property sales?

Some owners will sell, but with lenders demanding resolution and buyers returning to the market, sales in 2026 look more like transactions than capitulation. For the first time in years, selling a San Francisco asset means selling into genuine institutional demand.