Banks’ overall commercial real estate delinquency rate increased in the first quarter, albeit slightly, Trepp reported, citing the results of Trepp’s Anonymized Loan-Level Repository (T-ALLR) data set. The two-basis point increase from 0.87% to 0.89% was “noticeable after the previous pattern of steady improvement” over the preceding four quarters, according to Trepp. 

The office sector was the main contributor to the overall increase, with delinquencies in this sector rising 50 bps to 1.8% in Q1. In contrast to the broader CRE market, though, delinquencies for office have been rising for the past several quarters. 

“Concerns about the office property type have continued to increase, with banks’ risk ratings on office loans in large urban markets going up,” wrote Trepp’s Matthew Anderson.  

The highest delinquency rates are in the lodging and retail property types, although the delinquency rate for retail has been improving since Q4 2020 and the lodging delinquency rate declined in Q4 2021, according to Trepp. These were the two sectors within commercial real estate that were hardest hit by the pandemic.