Multifamily workouts more often resolve through forbearance and modification because cash flow is recoverable through lease-up or rent growth. Office workouts in 2026 frequently require deep value re-mark, fresh equity contribution, or note sale because operating cash flow has been structurally impaired by post-pandemic occupancy declines.
Why is multifamily more workable?
Multifamily demand has remained largely intact across most metros. A multifamily property that is underperforming usually has a fixable operational issue (poor management, capex deferral, lease-up timing) rather than structural demand collapse. Modifications that buy 12 to 24 months typically work because the underlying cash flow recovers.
Why is office harder?
Office demand has shifted permanently in many markets. Properties that were 90 percent leased in 2019 are 60 percent leased in 2026 with no clear path back. Workouts must reflect the new economic reality, which often means writing the basis down to current value through partial loan forgiveness, A/B note splits, or sponsor capitulation.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Financial Stability Report · Board of Governors of the Federal Reserve System · 2025-11