Since partway into the pandemic, distress has been a, well, distressing topic. People expected it immediately but then values, prices, and rent growth grew at historically high paces. Then came inflation and, eventually, interest rate jumps that put many properties into a questionable ability to gain refinancing.

In a report on May 2023 capital trends, MSCI said that by the end of the first quarter in 2023, distressed property grew to $63.7 billion, with 10% of that added in Q1 as "inflows of newly troubled assets exceeded workouts by more than $5.7b."

Unsurprisingly, the level of distress varied greatly by property type. However, the category with the largest amount of distress was not office, which has received significant coverage for the difficulty it's been in, but retail. The latter currently has $22.5 billion in distress, 35% of the entire total, compared to $18.3 billion for office, and hotel taking third place with $13.3 billion.