Rising Interest Rates, Apartment Lending Expansion, and Office Refinancing Risks: What It Could Mean for Commercial Real Estate
The national lending environment is shifting again — and commercial real estate investors are starting to feel the effects.
Across the country, lenders are adjusting strategies, refinancing is becoming more complicated, and certain property types are proving far more resilient than others.
Those shifts may seem distant from Idaho at first glance, but the broader lending trends can influence Boise commercial real estate, development activity, and investment strategies throughout the Treasure Valley.
According to reporting by Mark Heschmeyer in CoStar News (you can read the original article here: https://product.costar.com/home/news/1975206382), recent developments in the commercial mortgage market highlight three important forces shaping real estate today: growing multifamily lending, refinancing pressure for large office assets, and higher interest rates affecting borrowers nationwide.
Together, these trends offer insight into where real estate capital is moving — and where challenges may emerge.
Multifamily Lending Continues to Attract Capital
One of the most notable developments involves Zions Bancorporation, a Salt Lake City–based bank with strong ties across the western United States.
The bank is expanding its presence in apartment lending by acquiring part of a multifamily loan platform from Basis Investment Group, including both the lending team and loan portfolio tied to government-backed housing finance programs.
The platform specializes in financing apartment properties supported by agencies such as:
- Fannie Mae
- Freddie Mac
These types of loans are often used to support workforce housing and affordable apartment projects.
Zions already maintains a sizable apartment lending portfolio, which has grown significantly in recent years. Data cited in the report shows the bank’s multifamily loan holdings increased from roughly $2.9 billion in late 2024 to more than $3.2 billion by the end of 2025.
That expansion reflects a broader trend: multifamily properties continue to attract strong lender interest, even as other sectors face uncertainty.
For markets like Boise, where population growth has fueled strong housing demand, continued lending support for apartments could help drive additional development and investment.
Office Buildings Face Refinancing Pressure
While apartments remain attractive to lenders, the office sector continues to face headwinds.
One example highlighted in the report involves a major office tower in Pittsburgh that is approaching a loan maturity date. The property’s debt has been transferred to a special servicer as the borrower attempts to navigate refinancing challenges.
Even though the building’s financial performance has remained relatively stable, several factors are complicating refinancing:
- A large tenant lease expiration within a few years
- Significant existing debt layers
- Elevated vacancy rates in the surrounding office market
These challenges are not unique to one city.
Across the country, many office buildings are confronting similar issues as lenders reassess risk tied to changing workplace trends and higher borrowing costs.
In many downtown markets, office vacancy remains elevated, making refinancing more difficult for heavily leveraged buildings.
Rising Interest Rates Are Reshaping Refinancing
Interest rates are another major factor influencing commercial real estate today.
According to a Bank of America analysis cited in the CoStar report, higher Treasury yields are narrowing the number of borrowers who can refinance maturing loans without adding new equity.
The research examined loans scheduled to mature in 2026 and found that:
- About 69% of loans could refinance at a 6.5% borrowing rate
- That figure was 71% when borrowing costs were closer to 6%
The change may seem small, but even minor increases in interest rates can dramatically affect underwriting calculations.
In total, roughly $36.5 billion in commercial loans are scheduled to mature before the end of the year.
Refinancing risk varies widely by property type.
According to the analysis:
Industrial properties
- Show strong refinancing potential due to income growth and appreciation
Multifamily properties
- Still perform relatively well but are somewhat sensitive to interest rate increases
Office properties
- Face the greatest challenges, with very few loans refinancing on schedule in 2026
These trends illustrate how the lending environment is becoming more selective.
Why These Lending Trends Matter for Boise Commercial Real Estate
Although the examples cited in the report come from larger national markets, the underlying trends could influence Boise development and investment activity.
Several implications stand out.
Multifamily Development May Remain Active
Continued lending expansion for apartment projects suggests lenders still see strong fundamentals in housing.
In the Treasure Valley, where population growth and housing shortages remain ongoing challenges, that could support additional multifamily development and investment property activity.
Office Financing May Remain Selective
The national office market continues to adjust after the pandemic-era shift toward remote and hybrid work.
For Boise’s office market, the impact has been less severe than in some larger cities, but lenders are still approaching the sector cautiously.
Properties with strong tenants, modern design, and flexible layouts are likely to perform better than older buildings with high vacancy.
Interest Rates Will Influence Investment Decisions
Borrowing costs remain one of the biggest factors affecting commercial real estate investment.
Higher rates can slow development and acquisitions, but they can also create opportunities when pricing adjusts.
Investors who have strong balance sheets or lower leverage often gain an advantage during these periods.
Local Insight: Capital Is Moving Toward Stability
From a Boise commercial real estate perspective, one clear theme stands out: capital is flowing toward property types with stable demand.
Right now, those sectors include:
- apartments
- industrial buildings
- certain specialized commercial properties
Office assets can still succeed, but investors and lenders are focusing more heavily on tenant quality, lease stability, and long-term market fundamentals.
For developers, landlords, and investors watching Boise’s growth, understanding where capital is flowing can provide valuable clues about the next phase of the market.
While national lending trends don’t always translate directly to smaller metros, they often shape the availability of financing, investor sentiment, and development activity that ultimately affect local real estate markets.
Mike Gioioso (joy-OH-so) has for 16+ years been helping companies of all sizes buy, build, and lease perfect places for business in greater Boise, Idaho and beyond.
www.streetsmartidaho.com
mike@streetsmartidaho.com
208-209-9166
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