So much in CRE and economics is a bad news/good news situation. April special servicing figures took their biggest jump in four years. That's the bad side. The good — commercial real estate loan delinquency growth has decelerated again says S&P Global Market Intelligence.

"Growth in commercial real estate delinquencies slowed for the second consecutive quarter as high interest rates continue to pressure borrowers while banks emphasize that stress remains concentrated in the office sector," they wrote. "Overdue commercial real estate (CRE) loans across US banks increased 10 basis points sequentially to 1.25% in the first quarter, according to data from S&P Global Market Intelligence. While that represents a new cycle high, the increase was less than the increase of 11 basis points in the fourth quarter of 2023 and the increase of 21 basis points in the third quarter of 2023."

As S&P Global noted, regulators have been watching banks for their exposure to CRE loans. The concern is that low transaction numbers restrict price discovery. As valuations are depressed, the value of CRE loans also falls below how they've been treated on bank balance sheets. Silicon Valley Bank, Signature Bank, and First Republic Bank showed last year what happens when asset prices drop, and depositors get concerned about whether the banks are solvent enough to protect deposits.