KNOW YOUR DEBT STACK: How the 2021-2022 Lending Boom is Reshaping Puget Sound Multifamily Today
For many multifamily owners across the Puget Sound region, 2021 and 2022 were years of opportunity. Interest rates were at historic lows, transaction volume was surging, and financing was available on favorable terms that made acquisitions and refinances look compelling on paper. For a number of those same owners, 2026 is when the bill comes due.
The commercial real estate industry is navigating what has become known as the “maturity wall”, a concentrated wave of loans originated during the low rate era that are now reaching the end of their terms. Multifamily debt made up $310 billion of nearly $957 billion in loans that matured in 2025, many of which received extensions rather than being paid off. Those extensions bought time, but they did not eliminate the underlying pressure. The loans still exist, and they are now refinancing into a meaningfully different lending environment than the one in which they originated.
The difference matters. The average rate on commercial real estate loans has risen to around 6.24%, up from 4.76% on the maturing debt it is replacing. For an owner who locked in a 3.5% rate in 2021, refinancing today at current rates will represent a significant increase in annual debt service which will wipe out cashflows. Furthermore, the existing income may not fully support the loan-to-value on your current loan, which forces many owners to bring additional cash to the table just to refinance at a comparable loan balance.
Multifamily fundamentals in the Puget Sound remain strong, and agency lenders are still active in this market, but the window for a passive approach to debt management is narrowing. Owners who understand their maturity dates and refinancing options today will have far more flexibility than those who wait until a deadline forces their hand. An owner who is proactively preparing for their upcoming maturity will be better positioned on a refinance or sale than someone who is passively waiting for their interest rate to adjust.
The lending environment of 2020-2022 was an anomaly, not a baseline. The owners best positioned in 2026 are those treating their debt as actively as their operations.
The first step for any owner is to obtain a market analysis, or at minimum, connect with a commercial real estate professional to discuss current market conditions and develop a clear game plan.
On the Platt-Urquhart-Douglas team at Paragon, our expertise goes beyond just a listing. We've tailored our brokerage approach to help owners not only prepare for a sale today but also plan for sales down the road by navigating the ever-changing multifamily market in 2026 and beyond. Give us a call if you'd like to strategize what the next 12–36 months could look like for your investment property.
If you would like to know more about 1031 exchanges, want to know the market value of your investment property or would like a referral to a tax, legal or 1031 exchange professional, please feel free to reach out to anyone on their team. Brian Platt at Brian@ParagonREA.com (206) 251-8483, Michael Urquhart at Michael@ParagonREA.com (425) 999-6650, Ben Douglas at Ben@ParagonREA.com (206) 658-7247, or Rowan Davis at Rowan@ParagonREA.com (206) 406-9105.