Arkansas Broker Jerry Larkowski: $3 Trillion Debt Balloon Could Reshape Investment Landscape in 2026

LITTLE ROCK, AR – A significant wave of commercial real estate refinancing obligations set to mature over the next 12 to 18 months could fundamentally alter investment opportunities across the United States, according to Arkansas-based real estate broker Jerry Larkowski from ESQ. Realty Group LLC.

Larkowski, who works in Little Rock, estimates approximately $3 trillion in commercial real estate debt structured with five-year balloon payments will come due during this period. Properties financed when interest rates hovered in the low-to-mid single digits now face refinancing at rates roughly 150% higher, creating financial pressure across the investment spectrum.

“If the interest rates are 150% of what they were, property owners are either going to have to dip into cash reserves and bite the bullet, they’re going to have to raise rent or raise money some other way, or they’re going to have to sell,” Larkowski explains. “I’m already seeing it with just the small guys who buy $200,000 rent houses. I’ve already heard four of my former clients are either listing or about to list.”

The coming refinancing wave affects properties ranging from individual rental homes to large commercial holdings. Larkowski views this as creating distinct opportunities for buyers willing to target distressed sellers rather than waiting for broader market conditions to improve.

His strategy centers on identifying what he calls “need-to sellers,” property owners facing financial pressure from balloon payments who must liquidate before refinancing deadlines. These sellers, he argues, will negotiate prices that make monthly payments sustainable for buyers at current interest rates, even if that means accepting less than they would in a stronger market.

“Property values are not going to crash unless you panic, unless you file bankruptcy, unless you get put into receivership,” Larkowski notes. “As long as one can hold out, the comps from the past are still there and will support a price close to list.”

Larkowski challenges the widespread expectation that interest rates will return to pre-pandemic levels anytime soon. He points to surprise among chief economists when rates briefly dipped below six percent, arguing that temporary fluctuations mislead buyers into continued waiting rather than taking action.

“I really don’t see rates dropping anytime soon, and I’m not hearing from anybody else in this industry that thinks they will either,” he observes. His message to buyers emphasizes action over anticipation: find properties that work within current financial parameters rather than holding out for favorable conditions that may not materialize.

Banks wouldn’t pre-qualify borrowers for amounts beyond their means, he argues, particularly given regulatory oversight and the potential for artificial intelligence to streamline auditing processes as federal agencies modernize operations.

For investors weighing geographic options, Larkowski advocates strongly for heartland markets like Arkansas over coastal alternatives. He characterizes property value patterns in the middle of the country as resembling a healthy heartbeat, steady and predictable, contrasting sharply with the dramatic swings that define markets on both coasts.

Arkansas specifically offers structural advantages including lower property taxes, decreasing state income tax burdens, and strategic proximity to Dallas, which is projected to become the fourth-largest metropolitan area in the United States by 2030. Little Rock sits just four hours from that expanding economic center.

“Property values are better here, quality of life is better, and there just seems to be so much more drama on the coasts,” Larkowski notes. “Everything I’ve heard for all the years I’ve been in this business is if you’re on one of the two coasts, prices go up and down. Here it’s more like a healthy heartbeat.”

Larkowski brings a legal background to his real estate practice, allowing him to guide clients through complex transaction processes with depth that purely sales-focused agents cannot provide. This combination of legal knowledge and market insight informs his perspective on the current landscape.

His philosophy for buyers and sellers in 2026 emphasizes decisiveness over perfectionism. While acknowledging that some timing proves better than others, he argues that waiting for ideal conditions often costs more than acting on good-enough opportunities.

“There’s never a bad time to buy or sell a house,” Larkowski concludes. “If somebody’s been ready to jump in the pool, jump on in. The water’s fine.”

About ESQ. Realty Group, LLC: ESQ. Realty Group, LLC serves the Little Rock, Arkansas market, providing real estate services for residential and commercial properties. The firm specializes in serving both investors and owner-occupants with transaction expertise supported by legal knowledge.

The views expressed are those of the broker and are based on current market conditions. Real estate investments carry risk, and market conditions may change