New York City's commercial real estate market faces a once-in-a-generation refinancing challenge. Over $1.5 trillion in commercial real estate loans nationwide will mature by the end of 2026, and NYC sits at the epicenter of this wave. Whether you hold a maturing CMBS loan on a Manhattan office tower, a rent-stabilized multifamily portfolio in the outer boroughs, or an industrial property in Long Island City, understanding your refinance options has never been more critical.
This guide covers every refinance strategy available to NYC commercial property owners, from rate-and-term refinancing and cash-out programs to CMBS defeasance, loan restructuring, and maturity extensions. For a broader overview of refinancing programs, visit our commercial refinance loans page.
Why Are So Many NYC Commercial Loans Maturing Right Now?
The 2025-2026 maturity wall represents the largest wave of commercial mortgage maturities in history. Nearly $936 billion in commercial real estate loans are scheduled to mature in 2026 alone, roughly 19% more than 2025's revised estimate of approximately $1 trillion. Nationally, approximately $600 billion of loans on bank balance sheets and $169 billion in CMBS are reaching maturity by year-end 2026.
For New York City specifically, the impact is outsized. A massive wave of 2015-2017 vintage loans on Manhattan offices and hotels are now coming due. Many of these loans were originated during a period of historically low interest rates and peak valuations. Borrowers who locked in rates between 3.0% and 4.0% now face a market where refinance rates start at 5.18% and can reach 7.0% or higher depending on property type and leverage.
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The math is punishing. A $20 million office loan originated at 3.5% in 2016 carried annual debt service of roughly $1.08 million (interest-only). Refinancing that same balance today at 6.5% pushes annual interest to $1.3 million, a 20% increase that directly compresses net operating income and investor returns.
What Are Current Commercial Refinance Rates in New York City?
As of early 2026, NYC commercial mortgage rates range from approximately 5.18% to 12.75%, depending on the loan program, property type, and leverage. The 10-year Treasury yield sits at roughly 4.19%, and the 5-year Treasury at 3.73%, forming the benchmark for most permanent commercial loans.
Here is how rates break down by loan type for NYC properties:
- Agency (Fannie Mae/Freddie Mac): 5.25% to 5.90% for qualifying multifamily properties with 5-10 year terms
- CMBS: 5.50% to 6.75% for stabilized commercial properties at 60-75% LTV
- Bank/Credit Union: 5.75% to 7.25% for relationship borrowers with strong deposits and guarantees
- Life Insurance Companies: 5.25% to 6.00% for low-leverage (under 60% LTV) Class A properties
- Debt Funds/Private Lenders: 7.50% to 12.75% for transitional or higher-leverage refinancing
- HUD/FHA 223(f): 5.64% to 5.94% for multifamily refinance with 35-year terms
You can estimate your monthly payments using our commercial mortgage calculator to compare scenarios at different rate levels.
What Is the Difference Between Rate-and-Term and Cash-Out Refinancing?
Rate-and-term refinancing replaces your existing loan with a new one, typically to secure a lower interest rate, extend the loan term, or switch from a floating rate to a fixed rate. The loan amount stays roughly equal to the outstanding balance. This strategy works best when rates have dropped since origination or when a borrower needs to move from a maturing bridge loan into permanent financing.
Cash-out refinancing allows you to borrow more than your current loan balance, pulling equity from the property as liquid capital. In NYC, cash-out refinance programs typically allow up to 75% loan-to-value for most commercial property types, with Fannie Mae and Freddie Mac multifamily programs reaching 75-80% LTV.
One important consideration for NYC cash-out refinancing: the city's transfer taxes. While a straight refinance does not trigger NYC's Real Property Transfer Tax (RPTT) or New York State transfer tax, a cash-out refinance that involves a change in ownership or entity restructuring could create tax exposure. The NYC mansion tax adds a surcharge on residential transactions above $1 million, and commercial transfers above $500,000 face RPTT rates of 1.425% to 2.625%. Smart borrowers structure their refinance to avoid triggering these costs.
Use our DSCR calculator to check whether your property's income supports the higher loan amount in a cash-out scenario.
How Does CMBS Defeasance and Prepayment Work in NYC?
CMBS loans present unique refinancing challenges because they are securitized and sold to investors. Unlike bank loans, CMBS borrowers cannot simply pay off the loan early without navigating prepayment provisions. The two primary mechanisms are defeasance and yield maintenance.
Defeasance involves purchasing a portfolio of U.S. Treasury securities that replicate the remaining scheduled payments on the CMBS loan. The Treasury portfolio replaces the real estate as collateral, freeing the property for a new loan. Defeasance costs vary significantly based on remaining loan term and the Treasury yield curve. In the current rate environment, defeasance costs have moderated because higher Treasury yields mean it takes fewer dollars to purchase the replacement securities.
Yield maintenance requires the borrower to pay a lump sum equal to the present value of the interest rate differential between the loan coupon and the prevailing Treasury rate for the remaining term. When rates are higher than the original coupon, yield maintenance penalties can drop to near zero, creating a window for borrowers with older, low-rate CMBS loans.
For NYC owners with CMBS loans maturing in 2025-2026, the situation is actually more favorable than many assume. KBRA research shows that nearly 90% of CMBS loans with 2025 maturity dates (by count) paid off successfully, and the payoff rate by balance improved to 74.3% from 66.6% in 2024. Capital markets have shown selective openness to higher-quality assets, particularly office properties that have maintained occupancy.
What Challenges Do NYC Office Owners Face When Refinancing?
Office refinancing in Manhattan and the outer boroughs remains the single most difficult segment of the NYC commercial refinance market. Remote work adoption has driven vacancy rates above 20% in some submarkets, and office valuations have declined 30-50% from their 2019 peaks in certain corridors.
Traditional lenders have become extremely cautious on office properties. Borrowers facing maturing office loans often encounter several painful realities:
- Lower appraised values mean the new loan proceeds may not cover the existing balance, requiring an equity infusion or "cash-in" refinance
- Higher DSCR requirements from lenders (1.30x to 1.50x minimum) when rent rolls show near-term lease expirations
- Shorter loan terms of 3-5 years rather than the 10-year terms previously available
- Recourse requirements where lenders demand personal guarantees that were not required on the original loan
For owners of struggling office buildings, several alternative strategies exist. Bridge loans can provide 1-3 years of breathing room while the market stabilizes or while the owner executes a repositioning plan. Learn more in our commercial bridge loan guide. Debt funds provide mezzanine loans or preferred equity to help recapitalize properties, and some owners are financing conversions of obsolete office buildings to residential use.
If your office property still generates solid cash flow with strong tenancy, permanent refinancing remains achievable, particularly through bridge loan programs that can transition into permanent financing.
How Does Rent Stabilization Affect Multifamily Refinancing in NYC?
New York City's rent-stabilized multifamily properties present a distinct refinancing dynamic. The Housing Stability and Tenant Protection Act of 2019 eliminated most pathways for significant rent increases on stabilized units, fundamentally changing how lenders underwrite these buildings.
Lenders now value rent-stabilized properties based on actual regulated rents rather than projected deregulation income. Buildings that were purchased or refinanced before 2019 with aggressive underwriting assumptions about vacancy decontrol may face a valuation gap. A building appraised at $15 million in 2018 based on projected free-market rents might now appraise at $10-12 million based on regulated income alone.
Despite these challenges, rent-stabilized properties remain financeable. Agency lenders (Fannie Mae and Freddie Mac) actively lend on stabilized portfolios, often at favorable rates. The predictable income stream from long-term tenants with low turnover actually reduces risk from a lender perspective. DSCR ratios on stabilized buildings tend to be stable even if overall valuations are lower. Review our DSCR loan requirements to understand how lenders evaluate these properties.
Key considerations for rent-stabilized refinancing:
- Lenders use actual collected rents, not market comparables, for underwriting
- Capital improvement loans may be available through NYC HPD programs at subsidized rates
- Real estate tax assessments should reflect regulated income; appealing assessments can improve NOI
- Properties with a mix of stabilized and free-market units receive blended underwriting
What Role Does Local Law 97 Play in Commercial Refinancing Decisions?
Local Law 97, NYC's landmark climate legislation, is reshaping refinancing decisions across the city. Buildings over 25,000 gross square feet that exceed carbon emissions limits now face annual fines starting at $268 per metric ton of CO2-equivalent above the assigned limit. While a compliance extension was announced in early 2025 offering potential penalty waivers through 2029 for buildings demonstrating progress, the capital investment requirements remain significant.
Many building owners are folding LL97 compliance costs into their refinancing strategy. A typical commercial building in Manhattan might need $2 million to $10 million in energy efficiency upgrades, including boiler replacements, window upgrades, LED lighting retrofits, and building management system improvements. Cash-out refinancing allows owners to access equity for these improvements while locking in a new long-term rate.
C-PACE (Commercial Property Assessed Clean Energy) financing provides an alternative or supplementary funding source. PACE loans cover 100% of eligible improvements with terms up to 30 years and are repaid through the property tax bill. These loans are non-recourse and can be layered behind a first mortgage, making them particularly attractive for LL97 compliance work.
The smartest operators are combining a conventional refinance with C-PACE financing: the first mortgage covers the property value, while C-PACE funds the energy retrofit. This approach avoids over-leveraging the first mortgage while still accessing the capital needed for compliance.
What Loan Restructuring and Extension Options Exist for NYC Borrowers?
Not every maturing loan requires a full refinance. Loan restructuring and maturity extensions offer alternatives for borrowers who need more time or face unfavorable refinancing conditions.
Maturity extensions allow the borrower to push the loan due date forward, typically by 1-3 years, in exchange for a fee, partial paydown, or rate adjustment. Many NYC bank lenders have been granting extensions rather than forcing distressed sales, particularly on office and retail properties. Extension fees typically run 0.25% to 1.00% of the outstanding balance.
Loan modifications can adjust the interest rate, amortization schedule, or covenants on an existing loan. A lender might agree to reduce the rate slightly or extend an interest-only period if the alternative is a default that forces the property into special servicing.
A/B note splits restructure a single loan into a senior "A" note at the original terms and a subordinate "B" note that may carry different terms, including potential forgiveness tied to property performance milestones.
For CMBS loans in special servicing, the special servicer has broad authority to modify terms. NYC properties in special servicing have seen extensions, rate reductions, and even principal write-downs when the servicer determines that modification produces a better outcome for bondholders than foreclosure.
How Should NYC Borrowers Prepare for a Commercial Refinance?
Successful refinancing in this market requires preparation that starts 12-18 months before maturity. Here is a practical timeline for NYC commercial property owners:
18 months before maturity: Order a preliminary property valuation and review your current loan documents for prepayment provisions. Begin assembling updated financials including trailing-12-month operating statements, rent rolls, and capital expenditure history.
12 months before maturity: Engage a commercial mortgage broker or begin direct lender outreach. For properties with strong DSCR ratios, this timeline allows you to shop multiple lenders and secure the best terms.
6-9 months before maturity: Lock your rate, complete the application, and begin the appraisal and environmental review process. NYC properties often require Phase I environmental assessments, updated ALTA surveys, and zoning verification.
3 months before maturity: Finalize legal review, complete title work, and coordinate the closing. NYC closings involve mortgage recording tax (1.75% to 2.80% of the loan amount for properties in the five boroughs), so factor this cost into your analysis.
One critical NYC-specific cost: New York's mortgage recording tax applies to the full amount of a new mortgage but offers a credit for any existing mortgage being replaced. Structuring the refinance as a consolidation, extension, and modification agreement (CEMA) rather than a new mortgage can save tens of thousands of dollars on recording tax. Discuss CEMA eligibility with your attorney early in the process.
What Refinance Programs Work Best for Different NYC Property Types?
The ideal refinancing program depends heavily on property type, condition, and borrower goals. Here is how different NYC asset classes typically match to loan programs:
Multifamily (5+ units): Agency loans through Fannie Mae and Freddie Mac offer the most competitive rates and terms, with 5-30 year fixed-rate options and up to 80% LTV. HUD/FHA 223(f) provides the longest terms (35 years) and lowest rates but involves a 6-12 month process. Market-rate and rent-stabilized buildings both qualify.
Office: CMBS and bank loans for stabilized, well-leased properties. Bridge loans or debt fund financing for transitional assets. Life insurance companies for Class A assets at low leverage. Office refinancing volumes remain below pre-2020 levels.
Retail: Bank and CMBS loans for anchored, grocery-tenanted retail centers. Private lenders for single-tenant or specialty retail. Ground-floor NYC retail refinancing is evaluated heavily on lease terms and tenant credit.
Industrial/Warehouse: This sector commands the most favorable terms in the current market. Low vacancy rates and strong rent growth in NYC's industrial corridors (Hunts Point, Red Hook, Maspeth) attract competitive offers from all lender types.
Mixed-Use: Common in NYC, mixed-use properties (ground-floor retail with residential above) are typically financed based on the dominant use. If residential income exceeds 50-60% of total revenue, agency programs may be available.
Ready to refinance your NYC commercial property? Contact our team for a no-obligation quote tailored to your property type and situation.
What Are the Most Common Mistakes in NYC Commercial Refinancing?
Borrowers in the current market frequently make avoidable errors that cost them money or delay their refinancing. Watch out for these common pitfalls:
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Waiting too long to start. With 12-18 months of lead time ideal, beginning the process 3 months before maturity dramatically limits your options and negotiating leverage.
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Not shopping multiple lenders. Rate quotes on the same property can vary by 75-150 basis points across lenders. Getting 3-5 quotes is standard best practice.
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Ignoring CEMA savings. Failing to consolidate your existing mortgage through a CEMA agreement can cost 1.75-2.80% of the loan amount in unnecessary mortgage recording tax.
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Underestimating closing costs. NYC refinance closings involve legal fees, title insurance, appraisal, environmental, mortgage recording tax, and lender fees. Budget 2-4% of the loan amount for total closing costs.
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Overlooking capital reserves. Lenders increasingly require funded reserve accounts for capital expenditures, tenant improvements, and leasing commissions. These reserves reduce your net proceeds.
How Can NYC Property Owners Take Advantage of Current Market Conditions?
Despite the challenges, the current market offers genuine opportunities for well-positioned borrowers. Property owners with strong occupancy, growing NOI, and moderate leverage can access competitive rates. Industrial and multifamily owners in particular are finding lenders eager to compete for their business.
The improving CMBS market is also a positive signal. With payoff rates climbing and new issuance growing, liquidity is returning to segments of the market that were effectively frozen in 2023-2024. Borrowers with quality assets should find more lender options available now than at any point in the past two years.
For properties facing valuation challenges, creative capital structures can bridge the gap. Preferred equity, mezzanine debt, and C-PACE financing can supplement a smaller first mortgage to cover the full capital stack. These structures add complexity and cost but may preserve ownership in properties that would otherwise face distressed outcomes.
Need help navigating your NYC commercial refinance? Our team works with borrowers across all five boroughs on refinancing for every property type. Get started with a free consultation and let us match you with the right lending program.
For more information about commercial lending options in New York City, visit our New York City commercial loans page.
Frequently Asked Questions
What is the minimum DSCR required for a commercial refinance in NYC?
Most lenders require a minimum debt service coverage ratio (DSCR) of 1.20x to 1.25x for stabilized commercial properties in NYC. Agency multifamily lenders may accept 1.15x to 1.20x for strong properties. Office and retail properties face stricter requirements, often 1.30x to 1.50x, reflecting higher perceived risk. You can check your property's DSCR using our DSCR calculator.
How much does CMBS defeasance cost in the current rate environment?
Defeasance costs depend on the remaining loan term, the original coupon rate, and current Treasury yields. In the current higher-rate environment, defeasance on older low-coupon loans can cost 5-15% of the loan balance. However, for loans originated in 2018-2020 at rates close to current levels, defeasance costs may be minimal. A defeasance consultant can provide an exact quote within 24-48 hours.
Can I refinance a rent-stabilized building in NYC?
Yes. Rent-stabilized buildings are actively financed by Fannie Mae, Freddie Mac, banks, and CMBS lenders. Underwriting is based on actual regulated rents rather than projected market rents. While valuations may be lower than pre-2019 levels, the stable and predictable income stream makes these properties attractive to risk-averse lenders.
What is the mortgage recording tax on a commercial refinance in NYC?
New York City's mortgage recording tax ranges from 1.75% to 2.80% of the mortgage amount for commercial properties. However, using a CEMA (Consolidation, Extension, and Modification Agreement) allows borrowers to pay tax only on the incremental increase in mortgage amount rather than the full new loan. CEMA savings can reach hundreds of thousands of dollars on large loans.
How long does a commercial refinance take in NYC?
Timelines vary by loan type. Bank loans typically close in 45-60 days. CMBS loans require 60-90 days. Agency loans (Fannie Mae/Freddie Mac) close in 45-75 days. HUD/FHA 223(f) loans take 6-12 months due to extensive government review. Bridge loans from private lenders can close in as little as 2-4 weeks for time-sensitive situations.
Should I refinance now or wait for rates to drop?
This depends on your loan maturity date and risk tolerance. If your loan matures in 2025-2026, waiting carries significant risk since there is no guarantee rates will decline meaningfully. Many borrowers are refinancing now with shorter-term loans (3-5 years) to take advantage of potential future rate reductions. The Federal Reserve's rate path remains uncertain, and locking in current rates eliminates the risk of further increases. Contact us to discuss your specific timing considerations.