Real Estate Finance & CRE Debt: Distressed Opportunities in North Carolina (2025–2030)

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Introduction

North Carolina’s commercial real estate (CRE) market is at a pivotal juncture. The state’s robust economic and population growth has fueled strong demand for property – from Raleigh’s booming tech corridor to Charlotte’s financial hub – yet a high-interest-rate environment and a looming wall of loan maturities are straining real estate finances. Investors, both institutional and individual, are watching closely as refinancing challenges mount and asset values adjust. Over $950 billion in U.S. commercial mortgages (roughly 20% of the total) come due in 2025 alone, and North Carolina is no exception to this “maturity wall.” Many property owners who locked in low-rate debt during the 2010s now face much higher refinancing costs, potentially triggering distress sales and “rescue capital” opportunities. At the same time, the state’s economic momentum – North Carolina’s population is projected to swell by about one million people between 2020 and 2030 – ensures that demand for quality real estate remains a long-term tailwind. This article examines the outlook through 2030 for key asset classes (multifamily, office, industrial, and mixed-use) in North Carolina, with a focus on real estate finance, CRE debt, and distressed investment opportunities. We ground the analysis in North Carolina–specific data (sourced in part from the Loan Analytics database) and consider how macroeconomic trends like interest rates and capital flows are reshaping the investment landscape.

Economic & Financial Backdrop (2025–2030)

North Carolina enters the late 2020s as a Sun Belt powerhouse, attracting major employers and new residents with its diverse economy and relatively low costs. Metro areas like Charlotte and Raleigh-Durham consistently rank among the fastest-growing in the U.S., creating strong underlying demand for commercial space. However, the financing environment has shifted dramatically from the “free money” era of the 2010s. After aggressive Federal Reserve rate hikes in 2022–2023 to tame inflation, borrowing costs in 2025 remain high by historical standards, even after modest rate cuts in 2024. The era of ultra-cheap debt is over – and borrowers who “opportunistically increased leverage” during that time are now hitting the end of their loan terms. Refinancing these loans means swapping out sub-4% interest rates for loans often in the 6–8% range, a shift that erodes debt service coverage and property values.

Regulatory and political currents add complexity. With a new administration in Washington in 2025, lenders anticipated looser regulations and a more business-friendly stance, but uncertainty persists. Traditional banks – and North Carolina is the nation’s second-largest banking center – remain cautious, tightening credit standards and reassessing loan criteria amid economic crosswinds. In practice, North Carolina’s lending scene mirrors national trends: big banks pulling back slightly, while alternative lenders and private credit funds step up to fill financing gaps. This dynamic is already visible in CRE capital flows: by late 2024, balance-sheet lenders had retrenched, and more deals shifted to CMBS and private lenders to secure funds.

Macroeconomic trends are tempering asset valuations across the board. Higher interest rates directly translate into higher capitalization rates (cap rates) and lower property values, especially for interest-rate-sensitive assets like offices and multifamily. At the same time, North Carolina’s strong job and population growth provides a relative cushion. The state’s unemployment is below the national average and diverse industries (tech, finance, life sciences, manufacturing) continue to expand. Investors still have ample liquidity earmarked for high-growth markets like North Carolina, but they are increasingly selective – focusing on prime locations and income stability. In essence, the late 2020s will reward quality and creativity in CRE finance: well-capitalized projects in strong markets should find financing (albeit at higher costs), whereas overleveraged or marginal assets may struggle, creating openings for distressed-asset investors.

The Refinancing Cliff: Loan Maturities & Distress

A core challenge looming through 2025–2027 is the sheer volume of commercial debt coming due. Roughly $1 trillion in U.S. commercial real estate loans are set to mature by the end of 2025, a figure that inches even higher in 2026. In its latest survey, the Mortgage Bankers Association noted 2025 will see a slight uptick in maturities from 2024, with especially large portions of multifamily, retail, and healthcare property loans hitting their due dates. Many of these loans were originated 5–10 years prior, when interest rates were at historic lows and underwriting was premised on rosy rent growth and easy refinancing. Now, owners must refinance into an environment of much higher rates and more conservative appraisals, a recipe for funding gaps.

Industry analysts warn that a significant share of maturing loans won’t meet today’s stricter refinance standards. Federal Reserve estimates suggest about 15% of maturing CRE loans may fail to qualify for refinancing at current rates, mainly due to insufficient debt service coverage once the new, higher interest payments are factored in. In particular, office and retail properties – already hit by occupancy and valuation declines – are at greatest risk. Even in a moderately optimistic scenario of interest rates easing to ~5.5%, one analysis (Trepp) projects nearly 17% of maturing office loans might still not refinance successfully. This refinancing gap means many owners will face tough choices: inject fresh equity (“cash-in” refinances), sell the asset at a discount, or default and hand keys to the lender.

North Carolina’s property owners are feeling this pressure in real time. Loan Analytics data show dozens of commercial properties across the state hitting maturity in 2025–2026 with loan-to-value (LTV) ratios well above what lenders will now accept, especially in harder-hit sectors like older offices and recently built but highly leveraged apartments. Banks have been employing “extend and pretend” tactics – extending loan terms in hopes conditions improve – but regulators are pushing for more realistic resolutions. Indeed, banks extended a record volume of CRE loans in 2024 to postpone day of reckoning, and 2025 will likely bring a wave of loan workouts and note sales as lenders capitulate. Observers expect foreclosure and loan sale activity to crest by 2026 as the backlog of troubled debt is worked through. For opportunistic investors, this period marks a window to acquire assets or debt at distressed pricing. North Carolina’s fundamentally solid economy could make it a prime target for “rescue capital”: investors who recapitalize properties that are underwater on loans but viable in the long run. In short, refinancing challenges will drive a surge in distressed opportunities, and North Carolina’s growing market may attract a disproportionate share of turnaround capital seeking high-growth locales.

Multifamily: Strong Demand Meets Debt Pressure

Multifamily housing remains a standout asset class in North Carolina, underpinned by powerful demographic trends. The state’s population growth (nearly 1 million new residents expected 2020–2030) and ongoing job creation have kept apartment occupancy high and rents on an upward trajectory. Vacancy rates for rentals are exceptionally low – averaging around 5% statewide (and often lower in top metros), indicating a landlord-favorable market. A recent state-commissioned analysis projected North Carolina faces a cumulative shortage of about 322,000 rental units by 2029, underscoring how demand continues to outstrip supply. Even in the near term, industry insiders forecast robust rent increases. In early 2025, some North Carolina market observers predicted rents could rise 10–15% due to the squeeze between booming demand and hindered new supply.

Yet if the fundamental need for housing makes multifamily a long-run winner, the sector is not immune to the current financial strains. The cost of capital for apartment investors has more than doubled since 2021, and construction financing is particularly strained. Developers statewide have pulled back on new projects amid rising construction costs and expensive debt, leading to a sharp drop in housing starts. National data from CBRE indicates that by mid-2025, multifamily construction starts were down roughly 74% from their 2021 peak, as many planned projects no longer “pencil out” at higher interest rates. North Carolina mirrors this trend – for example, Charlotte saw record numbers of apartment completions in 2024 even as new groundbreakings fell to their lowest level in a decade (see figure below). Developers are largely waiting for financing rates to improve; only select projects in prime locations are moving forward in 2025, often backed by firms with ample equity or creative financing structures.

Development Slowdown in Charlotte: Charlotte’s construction pipeline highlights the divergence between multifamily and office development. In 2024, multifamily deliveries (blue line, left chart) hit a record high of around 16,000 units, even as groundbreakings (orange line) plunged to roughly 9,000 units, reflecting developers’ caution amid high interest rates. Conversely, office groundbreakings (orange line, right chart) collapsed to near zero (approximately 250,000 sq. ft. in 2024) while about 950,000 sq. ft. of previously started office projects delivered (blue line). This exemplifies how rising financing costs and weak office demand froze new office development, even as ongoing multifamily projects continued to come online.

For owners of existing multifamily properties in North Carolina, the main stress point is refinancing debt on assets purchased or built at peak pricing. Many apartments acquired in the 2016–2021 period (when cap rates were extremely low) are now over-leveraged relative to their current NOI and higher interest payments. Loan Analytics data confirms that a number of North Carolina multifamily loans coming due in 2025–2026 will require “cash-in” refinancing – borrowers must contribute additional equity to meet lenders’ stricter debt-service coverage ratios. Those who cannot may be forced to sell. Indeed, multifamily is beginning to show signs of distress in loan performance: delinquency rates on securitized multifamily loans roughly doubled over 2024, reaching about 4.2%, according to Loan Analytics, as higher rates squeezed property cash flows. While that default rate is still relatively low, it has ticked up quickly from under 2.5% a year prior, signaling that pockets of distress are emerging – even in a sector with solid tenant demand.

Distressed opportunities in multifamily are likely to revolve around these over-leveraged assets. In North Carolina’s high-growth cities, well-located apartment communities with occupancy issues or under-market rents could attract turnaround investors if their current owners come under lender pressure. Investors with fresh equity can potentially assume or buy distressed loans at a discount, then restructure the debt or reposition the property (for example, by renovating units to justify higher rents). Given the severe housing shortage, any distressed sales may be quickly absorbed: expect private equity groups, family offices, and even institutional players to vie for quality North Carolina multifamily assets that hit the market at reduced pricing. On the flip side, Class A multifamily in prime locations is still considered a relatively safe haven – even as values have corrected from 2021 highs, the combination of population growth and limited new construction bodes well for rent growth and occupancy. By 2030, North Carolina’s apartment sector is poised to expand significantly, and those investors who navigate the current debt turbulence may reap substantial gains once interest rates stabilize.

Office: Flight to Quality and Repurposing Distress

No sector has been more disrupted by the pandemic and rising rates than office real estate, and North Carolina is experiencing this firsthand. Office vacancies have climbed to historic highs in the state’s urban centers, particularly in older buildings. Charlotte – pre-pandemic one of the Southeast’s hottest office markets – saw overall vacancy hit roughly 25% in 2024, and Raleigh-Durham isn’t far behind with over 20% vacancy. Crucially, the weakness is concentrated in dated properties. Demand for premium office space remains relatively high, but aging office buildings are struggling in the face of remote/hybrid work and a corporate “flight to quality” toward newer, amenity-rich towers. According to Loan Analytics data (via JLL), more than 80% of Charlotte’s office vacancies are in buildings constructed before 2015 – an striking statistic that illustrates the bifurcation in the office market. Newer Class A offices in prime submarkets are still attracting tenants (often at the expense of older stock), whereas Class B/C buildings in downtown cores are languishing, with some largely empty. A stark example unfolded in Winston-Salem: after a major employer vacated 700,000 sq. ft. of space, downtown office vacancy spiked to nearly 40%. Similar stories are playing out in smaller NC cities where one or two big move-outs can upend the market.

The financial ramifications of this office upheaval are significant. Office property values have been marked down dramatically to reflect higher cap rates and uncertain cash flows. In some cases, values have dropped below the outstanding loan balances, leading owners to default. A case in point: an iconic 32-story office tower in Uptown Charlotte (400 South Tryon) was foreclosed on in late 2024 after its owners, including a well-known distressed investor, fell behind on loan payments. Lenders ultimately seized the property with a credit bid of just $36 million – roughly 40% of the $93.5 million loan balance and only one-third of its prior assessed value. According to Loan Analytics data, the tower was only 23% leased at the time of foreclosure, underscoring the collapse in tenant demand for that 1970s-era building. The sale sent shockwaves through the market: was this a one-off case, or a preview of how far values must fall for older offices to trade? Lenders and investors are closely watching whether that ~60–70% devaluation sets a baseline for other distressed office sales in North Carolina.

Going forward, office distress in North Carolina will likely continue to rise through 2025 and into 2026. Loan Analytics tracking shows many office loans ending up in special servicing or getting modified. Lenders are avoiding making new office loans except at very conservative terms, and some banks are even selling off distressed office debt to shed exposure. Market forecasts by Moody’s Analytics expect office vacancies to finally peak in late 2025 or early 2026. Net absorption (total space leased minus vacated) may actually turn positive thereafter, but recovery will be slow and uneven. Class A office valuations may have bottomed in early 2024, whereas Class B/C assets might not hit bottom until 2026 or beyond. In response, more creative workout strategies are emerging: we’re seeing loan modifications with A/B notes (splitting a loan into a smaller senior loan and a junior piece that only gets paid if performance improves), as well as outright lender consent to property conversions.

Adaptive reuse – converting obsolete offices into apartments or other uses – is a buzzed-about solution, and North Carolina has a few such projects underway or in consideration. Robbie Perkins, a Triad-area developer, notes that renovating a well-located but vacant office building into multifamily can be a “win-win,” easing office glut while adding much-needed housing. Indeed, several North Carolina cities are exploring policies to encourage office-to-residential conversions. These projects are complex and only pencil out for select properties (ideally those with floorplates and window layouts that suit residential units). They also often require public-sector support – such as tax incentives or zoning changes – to make financial sense. We can expect some high-profile conversions by 2030 (especially for smaller downtown office towers or former mills and warehouses in places like Winston-Salem, Durham, and Asheville), but conversion alone won’t absorb all surplus office space. Other aging offices may need substantial capital upgrades to attract tenants, be sold for land value, or even face demolition and redevelopmen.

For investors, the distressed office sector presents both perils and promise. The risks are evident: weak leasing fundamentals, high capex needs, and uncertain post-pandemic demand. Yet the opportunities are there for contrarian investors. Through 2025–2027, expect to see well-capitalized private equity firms and special situation funds targeting North Carolina offices at steep discounts, betting on a medium-term recovery. Some will take a “loan-to-own” approach – buying non-performing loans from lenders at a cut rate, with the intention of foreclosing and taking over the asset. Others may partner with existing owners to inject fresh equity (at a price that significantly marks down the prior valuation). The key for any successful play will be asset selection: focusing on offices that can either regain competitiveness (through renovations or location advantages) or those that can be repurposed or sold off in pieces (for example, redeveloping a well-situated office park into a mixed-use residential community). By 2030, North Carolina’s office landscape will likely look very different – a smaller overall footprint of office usage, but more modern and efficient. The path there, however, will be lined with distressed debt trades and recapitalizations of the kind not seen since the savings & loan crisis decades ago.

Industrial: A Continued Bright Spot, With Select Caution

The industrial sector – including warehouses, logistics facilities, and manufacturing space – has been a star performer in recent years, and North Carolina has ridden that wave. During the pandemic e-commerce boom, industrial vacancy in key markets like Charlotte and the Triangle hit record lows and rents soared. North Carolina’s strategic location and transportation infrastructure (deepwater port in Wilmington, interstate highways, major trucking routes, and rail connections) make it a prime logistics hub. Moreover, the state has scored huge economic development wins that drive industrial real estate demand: VinFast’s planned EV assembly plant, Toyota’s forthcoming battery factory near Greensboro, and multiple life-science and pharmaceutical manufacturing expansions are bringing millions of square feet of new industrial requirements. Even data centers – massive facilities often over 1 million sq. ft. – find North Carolina’s rural areas attractive for their abundant land, power, and water; a recent federal initiative to expand data infrastructure could catalyze rural industrial growth here.

All these factors point to robust long-term prospects for industrial real estate in the state. However, in the short term, the industrial market is experiencing a supply catch-up. Developers, drawn by strong demand, built aggressively over the past few years. Now some markets are absorbing a surge of new space at a time when economic growth has modestly downshifted. In Charlotte, for instance, the industrial vacancy rate has risen to around 11–12% as of mid-2025, up from the ultra-tight sub-5% levels of 2021. This ~12% vacancy is the highest in about five years for Charlotte’s warehouses, largely due to a glut of newly delivered big-box distribution centers awaiting tenants. Secondary industrial markets (like parts of the Triad and Eastern NC) have also seen vacancy inch up if one or two large facilities open without immediate occupancy. By contrast, Raleigh-Durham’s industrial market remains very tight – one of the lowest vacancy rates in the region – and continues to attract significant investor capital (over $900 million year-to-date through mid-2025). The divergence reflects that certain submarkets (especially those tied to high-tech manufacturing or last-mile logistics in dense areas) still have more demand than supply, whereas emerging logistics corridors might have gotten slightly ahead of themselves in building new space.

From a finance perspective, industrial properties in North Carolina are still viewed favorably. Lenders and investors alike prefer the sector for its strong tenant demand and generally lower capex needs compared to office or retail. Cap rates for industrial in NC have widened a bit (due to interest rates), but cap rate expansion has been modest thanks to solid rent growth. Many institutional investors are actively looking to increase their industrial holdings in the Carolinas, seeing any uptick in vacancy as temporary. That said, stress can appear in pockets: if a developer used short-term construction debt to build a warehouse and is now struggling to lease it, that project could face refinancing trouble. We may see a few distressed sales of speculatively-built warehouses if leasing velocity disappoints. These would present opportunities for buyers to step in and lease up the space with new marketing or perhaps at lower rents while still achieving a basis well below replacement cost. Another potential area of distress is older industrial facilities, especially those in less prime locations or with outdated specs (low ceiling heights, etc.). As newer, more efficient warehouses come online, some older sites could lose tenants and face valuation declines. However, those older industrial properties often become targets for redevelopment or niche uses (e.g. local last-mile depots, or even creative conversions to workshops/maker spaces).

Overall, North Carolina’s industrial CRE outlook through 2030 is optimistic. The state’s manufacturing revival and logistics growth should keep absorption healthy. By the late 2020s, today’s vacant big-box spaces in Charlotte or Greensboro will likely be filled by expanding companies, and rents will resume an upward climb after a short plateau. For investors, the relatively brief window of slightly higher industrial vacancy could be a time to negotiate better deals or acquire land for future development. Already, some national industrial developers and REITs are using the market lull in 2024–2025 to entitle new sites and be ready for the next wave of demand. In short, industrial remains a clear institutional favorite, and any distressed opportunities here will be quickly snapped up due to confidence in North Carolina’s economic trajectory.

Mixed-Use Developments: Paused, But Poised for a Comeback

Mixed-use projects – large-scale developments combining residential, office, retail, and sometimes hospitality – embody the future vision of many North Carolina communities. Cities like Charlotte, Raleigh, and Durham have embraced mixed-use to create vibrant “live-work-play” districts (examples include Raleigh’s North Hills expansion and Charlotte’s South End projects). Coming into the mid-2020s, however, mixed-use developments have encountered headwinds. These projects are complex and capital-intensive, making them especially sensitive to financing conditions. With construction loans expensive and one of their key components (office space) facing uncertain demand, several high-profile mixed-use schemes in North Carolina slowed down or stalled in 2024. An Axios Charlotte analysis noted that the city’s development market took a “breather” in 2024, as developers hesitated to launch new phases without clearer signs of demand and lower interest costs. For instance, Charlotte’s “Centre South” project – a major Dilworth neighborhood mixed-use plan – was delayed pending the securing of an anchor office tenant and a more favorable capital market environment. Similarly, in the Triangle, a number of announced mixed-use communities have pushed out their timelines, waiting for construction prices to stabilize and pre-leasing interest to firm up (especially for office and retail components).

Despite the short-term pause, the fundamentals driving mixed-use demand are intact. North Carolina’s urbanizing metros want and need more integrated development. Younger workers and incoming residents often prefer walkable districts with housing, entertainment, and workspaces intertwined. Local governments also encourage mixed-use as a tool for smart growth – it can help alleviate housing shortages (by adding apartments/condos), reduce traffic (by co-locating jobs and homes), and revitalize underused areas (like dead malls or industrial sites). In fact, state legislators have been exploring policies to fast-track housing development near jobs and transit, which could boost mixed-use projects that include significant residential components. By 2025, we’re already seeing some easing: developers report that capital markets have begun to thaw just enough to consider reviving stalled projects in 2025–2026. Interest rates, while still high, are expected to gradually decline over the next couple of years as inflation abates. If that holds true, many mixed-use developments in North Carolina could restart by the late 2020s, aiming to deliver product by 2027–2030 when demand has had time to grow into the space.

From an investment perspective, mixed-use projects require patience and deep pockets, but they can offer outsized returns once completed and stabilized. In the current climate, distressed opportunities in mixed-use might involve land or partially completed projects. For example, if a developer can no longer service the debt on a tract slated for mixed-use because their loan matured, an investor could step in to buy the site (or note) at a discount, then hold or re-plan until the market is ready. Likewise, partnerships between developers and new capital partners are likely – we may see more joint ventures where an investor injects equity into a stalled project to get it moving, negotiating a favorable share of profits in return. North Carolina’s track record with public-private partnerships (for instance, the transformation of downtown Durham and parts of Charlotte’s light-rail corridor) suggests that creative financing models will play a role. Municipalities might contribute via infrastructure improvements or tax incentives, while private investors bring the funding to build. By 2030, many currently “ghosted” mixed-use sites could be thriving new districts – but the path will involve restructuring and ingenuity in the interim. Investors who specialize in development finance or have the flexibility to invest across asset types will find North Carolina’s mixed-use vision an attractive arena, provided they navigate the current volatility prudently.

Outlook: Navigating the Next Five Years

Looking ahead to 2025–2030, North Carolina’s commercial real estate landscape will be shaped by the interplay of strong economic underpinnings and the aftershocks of the recent financial tightening. The state’s pro-growth story – job creation, in-migration, and diversification – is likely to continue, making it a favored destination for real estate investment. By the end of the decade, demand for multifamily housing should be even greater (as today’s housing shortage underscores), modern logistics facilities will be in high demand, and successful mixed-use hubs will enhance the appeal of the cities. Asset valuations, however, may take a few years to fully recover from the reset caused by higher interest rates. We expect 2025 and 2026 to be transitional years: borrowers and lenders working through the backlog of maturing debt, investors repricing risk, and some painful yet necessary corrections (notably in the office sector). During this period, distressed asset acquisitions and debt restructurings will be front and center. Savvy investors with available capital can capitalize on this “reset” phase – as Brighton Capital Advisors put it, distressed assets will set new cost bases for market absorption in the coming year. In other words, the deals struck in 2025–2027 will likely form the foundation for the market’s next growth cycle.

By 2028–2030, conditions should be more favorable: interest rates may normalize lower (improving financing affordability), and the wave of forced sales and foreclosures will have subsided. North Carolina’s CRE market at that point could emerge leaner but healthier – with many weaker hands shaken out and properties under new ownership or uses. For institutional investors, the state offers a compelling mix of growth and relative stability, so we anticipate sustained capital inflows into sectors like multifamily and industrial. Individual investors and smaller firms can also find niches, perhaps in value-add plays such as renovating smaller apartment complexes or repurposing defunct office/retail sites in growing suburbs. The key will be aligning with macro trends: housing affordability, logistic needs of new industries, and the desire for experiential live-work environments.

In conclusion, North Carolina’s commercial real estate future remains bright, but investors must traverse a complex financial terrain in the next few years. Refinancing challenges, loan maturities, and interest-rate pressures are real tests that will produce some losers and some big winners. Those who manage to refinance or acquire assets during this period of distress could find themselves holding high-quality properties purchased at a relative bargain. Meanwhile, the state’s economic vitality provides confidence that most sectors will ultimately rebound and prosper by 2030 – albeit with a different mix of properties and players than today. As always, thorough due diligence and creative financing will be paramount. North Carolina’s growth story isn’t without bumps, but for astute real estate investors, the coming five years offer a chance to not only witness the market’s evolution but actively shape it, turning short-term distress into long-term opportunity.

Sources: 

• Loan Analytics Database;

• Mortgage Bankers Association;

• Brighton Capital Advisors analysis;

• Carolina Journal;

• NC Office of State Budget & Management;

• NC Chamber/Bowen Report;

• Axios Charlotte;

• The Real Deal/Charlotte Business Journal;

• JLL Research via Loan Analytics;

• Moody’s Analytics via Brighton Capital;

• Loan Analytics (North Carolina).