NYC Sends 2nd Largest CMBS Office Loan in May to Special Servicing 

In May, 16 CMBS office loans totaling $738 million entered special servicing, according to May Office Special Servicing Spotlight from Moody’s. A $95 million loan for 393-401 Fifth Avenue, New York, entered special servicing due to an imminent balloon/maturity default, with nearly 100% of leases expiring within three years.  

The special servicing rate for CMBS office loans has surged, exceeding 10%. Factors such as the new hybrid work environment and high interest rates are placing significant stress on these loans. As office maturities increase and over $20 billion in CMBS loans are set to expire in the next year, more loans may enter special servicing. Despite this rise, it hasn’t led to higher delinquency rates. Office properties with strong tenant occupancy are likely to negotiate solutions, but those struggling with occupancy may face ongoing challenges.