National + Distressed Assets | September 11, 2023

CMBS Distress Rate Rises for Top 20 SMSAs

The distress rate for CMBS loans across the 20 largest markets in August was 7.2%, slightly above the national CMBS 2.0 rate of 6.8%, Kroll Bond Rating Agency (KBRA) reported. That rate, covering both delinquent and specially serviced loans, rose from 4.5% nationally in June 2022.

Although the rates for the majority of these MSAs were lower than the national rate, seven exhibited higher rates, with five over 10%. Chicago topped the list at 22.7%, with Denver, Philadelphia, San Francisco and Houston rounding out the top five. Conversely, seven of the top 20 MSAs had a distress rate lower than 2% (Orlando, San Jose, Phoenix, Miami, Boston, Seattle and San Diego).

All but one MSA experienced an increase in office distress rates during August, said KBRA; However, lodging rates decreased in 16 of 20 markets. Retail, multifamily and mixed-use assets exhibited varied performance across the 20 markets, while only three markets (New York, Chicago and Philadelphia) have distressed industrial loans.

The MSAs with the highest distress rates by property type include New York (retail, 17%), Denver (office,
40.2%), Houston (mixed-use, 75.5%) and San Francisco (lodging, 59.3%; multifamily, 22.7%).

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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