“Distress rates are up” has become the commercial real estate equivalent of “dog bites man.” The overall rate for CMBS financed properties has reached a record fifth straight high of 11.5%, adding 90 basis points in January 2025 from December’s 10.6%, according to CRED iQ.
The special servicing rate was up 50 basis points to 10.3%. In January 2024, it was 6.7%. And the delinquency rate was nearly 9.0%.
The highest level of distress, as anyone in CRE would likely guess, is office. The segment distress rates rose to 17.7%, showing “its decisive leadership as the most distressed property type.” There is some good news, as it only added 50 basis points since December.
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