Distressed Office Real Estate Acquisitions Surge as $875B Wall of Maturities Looms Over Commercial Market

Distressed office real estate sales surged to a 10-year high in 2025, totaling $4.3 billion nationally across 168 properties — a 31.3% increase over 2024 — according to a February report from CRE Daily. As a $875 billion wall of maturing commercial mortgages approaches in 2026, real estate services firm Voit Real Estate Services says the trend is expected to continue, presenting acquisition opportunities across investor types.

Ganmi Corp. Completes $103.5M Office Real Estate Acquisition in Downtown San Diego

Among the most notable recent transactions is the February acquisition of One and Two Columbia Place in downtown San Diego. Investment firm Ganmi Corp. purchased the two office towers from Los Angeles-based Regent Properties for $103.5 million — less than half the price Regent paid for the properties in 2021. The deal reflects the broader distress gripping downtown San Diego's office market, which carries a vacancy rate of 35.8%, according to Voit Real Estate Services' Q4 2025 research. By comparison, San Diego County's overall office vacancy rate stands at 14.12%, well below the national average.

CoStar reports that approximately 30% of downtown San Diego's office inventory has changed hands since 2024, with many properties trading at steep discounts to prior sale prices. Ganmi Corp. is repositioning One and Two Columbia Place by adding high-end food halls and other hospitality-level amenities, aiming to create what the firm describes as an experience-driven asset designed to attract and retain tenants' workers.

Southern California Office Real Estate Sees Wave of Discounted Sales

The Los Angeles office real estate market, where vacancy hovers around 25%, has also recorded a series of distressed transactions in recent years. In November, Nome Capital Partners acquired the Cerritos Towne Center portfolio for $35.6 million — a 50% discount — despite the property being 87% leased at the time of sale. In late December 2024, Los Angeles County acquired the Gas Company Tower for $200 million, compared to a 2021 appraised value of $632 million, representing a 68% decline from its peak valuation.

Private buyers represented more than half — 55.3% — of all distressed office acquisitions nationally in 2025, according to CRE Daily data cited by Voit Real Estate Services.

Wall of Maturities Pressures Office Real Estate Financing

A March report from the Mortgage Bankers Association identified $875 billion in outstanding commercial mortgages held by lenders and investors scheduled to mature in 2026, with 17% of office property loans coming due this year. The office delinquency rate for CMBS loans reached an all-time high of 12.34% in January, according to data from Trepp, though Voit Real Estate Services notes that figure is substantially higher than delinquency rates reported by banks, life insurance companies, and other lender categories.

Commercial mortgage rates remain elevated relative to pandemic-era lows despite recent reductions to the Federal Funds Rate, which now stands at 3.5% to 3.75%. According to CRE Daily, the average interest rate for commercial real estate loans issued in 2025 was 6.24%, a notable increase from the 4.76% average on older debt now coming due. Voit Real Estate Services notes that many loans originated between 2018 and 2021 — often structured with low cap rates and full-term interest-only terms — are now struggling to refinance under current market conditions.

Institutional and Non-Institutional Investors Eye Distressed Real Estate Acquisitions

Institutional investors are pursuing distressed office properties primarily as value-add opportunities, acquiring assets in major metros at a lower basis and investing in upgrades such as updated lobbies, conference space, and Class A amenities. With construction costs and labor continuing to rise, buying below replacement cost allows institutional buyers to offer competitive rents while maintaining an attractive tenant experience, according to Voit Real Estate Services.

Smaller-scale investors — including private capital, family offices, and high-net-worth individuals — are also active in the distressed office space, according to Voit Real Estate Services. These buyers can move more quickly than institutional capital by bypassing formal investment committee processes, enabling acquisitions of Class B and C office properties in central business districts for upgrading, medical office conversion, or retail repositioning. Developers are also acquiring distressed office buildings for conversion to multifamily or mixed-use properties.

Owner-occupiers represent another growing segment of distressed office buyers. According to an Urban Land Institute article published in 2025, owner-user sales accounted for 20% of total U.S. office sales in the first quarter of 2025, up from 15% in 2024 and from 8% or less annually before the pandemic. Voit Real Estate Services notes that owner-occupiers have access to SBA 504 and 7(a) loan programs, which allow up to 90% financing on qualifying properties — enabling a business owner to acquire a $2 million distressed building with as little as $200,000 down.

Voit Real Estate Services, which published the market commentary on March 19, 2026, advises that purchasing a distressed asset does not guarantee a risk-free investment and that due diligence and market knowledge remain essential to any acquisition strategy.