AriZona Real Estate insider!

While the market talks about rate cuts and soft landings, something a little more uncomfortable is brewing in the background—CRE debt is quietly piling up. That might not set off alarm bells yet, but if you’re watching the Phoenix market like I am, it’s worth paying attention to.

🚩 More Debt, Fewer Deals—Not a Healthy Combo

According to the Mortgage Bankers Association, total commercial and multifamily mortgage debt outstanding hit $4.7 trillion at the end of Q1 2025. That’s an increase of $40.1 billion from the previous quarter—even though loan originations actually fell in that same period.

That’s like watching someone max out another credit card while avoiding new purchases. Something’s not right.

The full article from Connect CRE breaks it down here:
CRE Mortgage Debt Rises in Q1 Despite Lower Origination Volume

🏢 What This Means for Phoenix

In the Phoenix market, this could signal a few things:

• Property owners are holding—choosing to refinance or extend loans rather than sell at today’s prices or take on new capital.
• Distressed sectors like office and older retail could be sitting on debt time bombs—especially if rates stay higher for longer.
• Multifamily remains resilient, but leverage still matters. Some highly leveraged deals from 2021–2022 could face painful resets.

This isn’t panic territory. But it’s a pressure build-up—and pressure has to release somehow. If the market doesn’t gradually thaw with falling rates or improving fundamentals, something’s going to crack.

🛠️ If You’re Investing, Watching, or Waiting…

You don’t need to run for the exits. But you do need to stay sharp.

• If you’re a buyer: There could be serious opportunity in the next 6–12 months. Keep your powder dry and your team ready.
• If you’re an owner: Now’s the time to review your debt stack. Don’t wait until you’re forced into a bad decision.
• If you’re a broker or lender: Expect more off-market whispers and quiet refinances. The real action may not be loud—it’ll be behind the scenes.

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The big takeaway? This market isn’t dead—it’s just quietly stressed. And when stress builds behind the scenes, those who pay attention will be first in line when opportunities (or cracks) appear. This is a time to be patient, cautious, and conservative—but also ready to sell or buy depending on your situation.

We’ve already warned about this trend before. If you missed it, check out this April post:
💣 The $384 Billion Time Bomb – Is Commercial Real Estate the Next 2008?

So if you read my blog… don’t say I didn’t warn you.