Monday Market Moves | Week of December 22, 2025

Welcome to Monday Market Moves, the weekly series from Essex Capital Markets briefing you on Chicago commercial real estate capital markets. We cover key trends in CRE debt, refinancing, and capital structures to help investors, borrowers, and lenders navigate today’s CRE financing market.

This Week: What the 2025 Refinancing Wall Taught the Market

As 2025 comes to a close, the commercial real estate market has clearly begun to work through the much-discussed refinancing wall. What was once a looming risk has produced a set of real outcomes, completed transactions, and hard lessons. For borrowers, lenders, and investors, the past year reshaped how refinancing risk is underwritten, structured, and solved.

As longer term solutions were put into place, the 2025 maturity wave revealed where deals were truly vulnerable and how capital adapted. The biggest takeaway is that refinancing success depended less on rate timing and more on preparation, structure, and flexibility.

What the Market Learned From the 2025 Refinance Cycle

First, rates were not the only constraint. While higher interest rates challenged proceeds, many refinancings fell short due to tighter DSCR requirements, rising operating expenses, and conservative underwriting assumptions. Borrowers who waited for rate relief often found that credit standards, not rates, were the limiting factor.

Second, bridge loans evolved from a last resort (the so called “Bend and Extend approach) into a strategic tool. In 2025, bridge capital was widely used to extend hold periods, preserve equity, and allow time for business plans to mature. Sponsors with clear exit strategies and realistic assumptions were able to use bridge financing successfully as a path to long-term capital.

Third, preparation consistently outperformed timing. Borrowers who engaged lenders early, aligned expectations around proceeds, and prioritized execution certainty were more likely to close successfully. Deals that entered the market late or relied on aggressive assumptions faced reduced leverage or stalled outcomes.

National Landscape: Capital Adapted, It Did Not Retreat

Nationally, while the rate of growth certainly slowed, capital did not necessarily exit the market during the refinancing wave. Instead, it repriced risk. Banks, agencies, and private lenders remained active, but adjusted leverage, structure, and reserves to reflect a higher-cost environment.

Bridge lenders stepped in where permanent capital could not size, while agencies continued to anchor the multifamily market for stabilized assets. The result was a market that continued to transact, albeit with greater discipline and tighter credit boxes.

Chicago Signals: Refinancing Outcomes Rewarded Realism

In Chicago, refinancing outcomes mirrored national trends. Stabilized multifamily assets with predictable cash flow continued to attract lender interest, while value-add and transitional deals required more creative capital solutions, often with more moderate leverage.

Bridge-to-perm strategies became common for sponsors seeking flexibility, particularly where rent growth or expense control needed more time to materialize. Borrowers with realistic underwriting and clear execution plans were best positioned to navigate the maturity cycle successfully.

How the 2025 Refinance Wave Is Shaping 2026

The lessons from 2025 are already influencing behavior heading into 2026. Lenders are underwriting earlier, sponsors are starting refinance conversations sooner, and bridge-to-perm planning is now part of standard capital strategy rather than an exception.

Rather than resetting expectations to pre-2022 conditions, the market has recalibrated around disciplined leverage, durable cash flow, and execution certainty.

Bottom Line

The 2025 refinancing wall did not break the market, but it has started to reshape it. Borrowers learned that preparation, flexibility, and realistic structure matter more than waiting for perfect conditions. As 2026 approaches, those lessons are driving smarter capital planning, earlier engagement, and more resilient outcomes across the Chicago CRE landscape.

Sources:

• https://www.mba.org/news-and-research/newsroom/news/2025/02/10/20-percent-of-commercial-and-multifamily-mortgage-balances-mature-in-2025
• https://www.globest.com/2025/02/18/cre-faces-440b-loan-maturity-wave-through-2026/
• https://www.aegonam.com/aegon-insights/real-assets/us-commercial-mortgage-loans-quarterly-commentary2/
• https://www.trepp.com/trepptalk/bridge-lending-fills-the-gap-as-cre-refinancing-pressure-builds
• https://www.credaily.com/briefs/debt-market-stabilization-signals-cre-lending-recovery/

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