The office sector has faced significant challenges since the pandemic, with U.S. commercial mortgage-based securities, or CMBS, having seen default rates jump by nearly a factor of four since the pandemic.
But there's also been a fundamental shift in how the submarkets of central business district and suburban offices act — and they make up 90% of the overall category — as a new report from Trepp CRE Research indicates. The shift is in those same CMBS default rates.
In the past, from at least 2016, peaking in mid-2017, and then on to December 2019, there was always better performance in CBD office than suburban. Looking at that peak for a moment, a category of all office soared to about an 8% default rates. The highest CBD office went was a brush with 5%. Suburban offices topped 18%.
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