Credit trends in commercial real estate will continue to deteriorate through 2024 and into 2025, says Fitch Ratings. Office will lead the decline, but properties in other sectors — retail, hotel, multifamily, and industrial — will also face deterioration the credit rating agency said.

"For U.S. CMBS, we expect the greatest decline in property net cash flows from office and non-trophy malls as growing macroeconomic headwinds and high interest rates lead to increased maturity defaults," they said. "Fitch forecasts overall U.S. CMBS loan delinquencies to double from 2.25% in November 2023 to 4.5% in 2024 and 4.9% in 2025."

According to the agency, November U.S. CMBS office delinquency rose by 64 basis points in November to 3.48%, with $1.59 billion in new 60-plus day loan delinquency. That was the largest increase since June 2020. The majority was office and multifamily.