As $2 trillion in commercial real estate debt matures, receiverships are steadying the Midwest market

The Maturity Wall

The driving force behind this cycle of distress is a surge of loan maturities meeting an unfavorable capital market. Many sponsors are approaching debt deadlines with assets valued well below their previous loan balances. Refinancing these loans has become increasingly difficult, especially for office properties with declining occupancy and shorter leases.

Industry data mirrors the dynamic we’re seeing on the ground. The commercial mortgage-backed securities (CMBS) delinquency rate reached 7.23% in September, with office loans exceeding 11%. The U.S. office vacancy rate climbed to a record high of 20.7% in the second quarter of 2025. In this environment, even well-positioned sponsors are facing refinancing gaps that can trigger defaults and, in turn, require receiverships.

This pressure is spreading beyond the office asset class. In older multifamily assets, rising expenses often outpace rent growth. Workforce housing and older industrial stock are showing strain in several Midwest markets. Senior housing is also exhibiting signs of stress. This sector was hit hard during COVID-19 and has yet to fully recover, leaving operators grappling with higher labor costs, staff shortages, and flat or declining rents.

Some distress stems from poor management, but more often it’s tied to the capital stack. Loan structures written during low-rate years no longer pencil out. Higher borrowing costs and lower valuations have pushed otherwise healthy properties into technical default. Receivership provides a path to stabilize those assets and give all sides clarity on their options.

Navigating Receiverships Across State Lines

Receivership is not a uniform process. Each state’s legal framework dictates how quickly a receiver can assume control, sell, or reposition a property. In Cook County, Illinois, for instance, the process is heavily court-driven. Judges play a hands-on role, and receivers are required to submit quarterly reports and attend regular hearings to review progress. That oversight promotes transparency, but often extends timelines. Michigan’s system, by contrast, is guided by the comprehensive Receivership Act of 2018 that gives the receiver immediate control and, in many cases, the power of sale. The clarity of that statute allows for faster execution and reduces carrying costs for lenders. This level of regional variation underscores why local knowledge and familiarity with the courts are essential.

Farbman Group has operated successfully under both systems, completing numerous receivership sales across the region. With 50 years of experience in the business, our firm’s longevity has given us the relationships, name recognition, and procedural insight to navigate court systems effectively. Our full-service platform supports that efficiency. We handle property operations, brokerage, and construction internally. When an asset enters receivership, our team can mobilize quickly, assess its physical and financial condition, and control expenses. That integration helps preserve asset value and keeps receivership fees competitive. It also allows us to move from stabilization to sale without adding unnecessary complexity or outside intermediaries.

The Role of Receivership in a Market Reset

Receivership activity across the Midwest is unlikely to slow down. The volume of debt reaching maturity will remain high through 2027 — and likely beyond. Many office buildings continue to face structural demand issues as tenants reassess space needs. Even in stronger submarkets, leasing momentum is uneven. In response, lenders and servicers are becoming more decisive. In the past, many opted for forbearance or loan extensions, hoping market conditions would improve. That patience is wearing thin. More lenders are now appointing receivers earlier in the process, recognizing that waiting rarely restores value.

The realities of today’s commercial real estate market are forcing a recalibration of pricing and ownership structures. Some assets will need to trade at a new basis that reflects current income and capital costs. In cases like these, experienced receivers play a critical role in that process by maintaining operations and transparency until a reset can occur.

Receivership work has long been a stabilizing force in commercial real estate. The current wave of distress will test that function at scale. Across the Midwest, receivers with the right mix of legal fluency and operational expertise will be vital to moving distressed assets through transition. For those equipped to manage that shift, receivership represents both a responsibility and an opportunity.

Michael Kalil is Chief Operating Officer of Farmington Hills, Michigan-based full-service commercial real estate firm, Farbman Group. To reach him directly, email kalil@farbman.com.