KBRA Releases Research – CMBS Office Lease Roll: Markets and Transactions Examined

NEW YORK–(BUSINESS WIRE)–#KBRA–KBRA releases a report that examines CMBS 2.0 office lease expirations scheduled in 2023 and also over the next five years. The report highlights lease expirations within the top 25 markets and transactions with the most CMBS office exposure. The piece also looks at lease rollover exposure that these transactions have to various market demand/supply metrics. In addition, we share our views on office exposure in new issue CMBS.

Key highlights from the report include the following:

Lease Expirations

  • Over 100 million square feet (sf) of office leases among the top five tenants in properties underlying CMBS transactions have scheduled expiration dates in 2023 and 2024. An additional 140.5 million sf is scheduled to come due through 2027.

Geographic Exposure

  • Miami has the highest percentage of top-five tenant sf expiring in 2023 (19.4%) but has fairly favorable market metrics, with over 600,000 sf of positive net absorption as of the year-to-date (YTD) period through Q2 2022.
  • Minneapolis has the highest percentage of top-five tenant space rolling over the next five years, at 72.3%, and is second only to New York in terms of negative net absorption, at just over 1 million sf.

Transaction Analysis

  • The deal with the most top-five tenant office sf expiring in 2023, at 18.6%, is GSMS 2017-GS7. On top of the high concentration of lease roll, the expiring sf is in three markets that are experiencing negative net absorption and negative quarterly rent growth.
  • The deal with the highest percentage of top-five tenant sf expiring over the next five years (63.9%), but slightly lower as calculated by allocated principal balance (51.8% of office loan balance), is BANK 2017-BNK 8.

Office Issuance

  • Post-global financial crisis (GFC) CMBS office exposure peaked in 2020 at 37.2% and then fell to 28.9% in 2021. As of YTD September 2022, this exposure has declined to 21.9%, which so far this year is tracking to have its lowest percentage since 2014.

The report includes an annual office lease expiration table and tables showing the top 25 metropolitan statistical areas (MSA) and top 25 transactions by office balance. It also contains the top 25 markets’ demand/supply metrics, as well as an office issuance chart.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.


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