The Trepp CMBS Special Servicing Rate rose 45 basis points in February 2025 to 10.32%. The increase followed the rate’s slight decline in January, which represented its first drop in more than a year.

Trepp cited two factors behind February’s sizable increase in the overall rate. First, the net balance of loans in special servicing increased by $1.8 billion, and second, the overall balance of loans outstanding fell by $8.8 billion.  “Thus, a comparatively larger numerator divided by a comparatively smaller denominator led to the substantial jump in the monthly rate,” wrote Trepp’s Vivek Denkanikotte.

Two property types contributed most heavily to the increase in the overall rate. The retail rate climbed 59 bps to 11.26% following a 100-bp drop the month prior. And the office rate rose 108 bps to 16.19%, marking yet another 25-year high.

Additionally, the mixed-use rate rose 33 bps to 13.04%, clearing the 13% mark for the first time since early 2013. Otherwise, none of the remaining property types changed by more than 15 bps in either direction, according to Trepp.

The CRED iQ CRE CLO distress rate added 60 basis points in December – reaching a new high of 13.8%.  Underpinning the distress rate, December’s delinquency rate for collateralized loan obligations came in largely flat at 11.8%; while the special servicing rate saw a 180-basis point increase, reaching 9%.  

CRED iQ’s analysis revealed that that 61.9% of CRE CLOs loans are operating below a 1.00 DSCR (NCF), up from 59.2% last month. Net Cash Flow (NCF) is a key variable in calculating a loan’s DSCR which determines the strength and creditworthiness of a given loan.

Among metro areas, Indianapolis-Carmel continues to lead the U.S. with a 70.6% distress rate. However, that figure trims 270 bps from the November print of CRE CLO loans in some form of distress.

The CRED iQ distress rate includes any loans reported 30 days delinquent or worse, past their maturity, specially serviced or a combination of these.

The Trepp CMBS Special Servicing Rate increased another 34 basis points to 9.14% in October 2024. Over the past six months, the rate has increased by just over 100 bps, with the October figure reflecting the 10th consecutive monthly increase, according to Trepp.

Among the major property types, the office sector saw the highest month-over-month increase in the special servicing rate, climbing 136 bps to 13.94%. Compared to October 2023, the office rate is up 539 bps. The last time the office special servicing rate breached 13% was in November 2011; it remained above 13% until July 2012.

Meanwhile, the lodging rate has continued to climb, reaching 8.32% in October; the last time it was above 8% was in May 2022 when the rate was coming down from COVID highs. Multifamily and retail also experienced upticks in October, each rising by 14 bps to 6.21% and 11.37%, respectively.

Kroll Bond Rating Agency said the delinquency rate among KBRA-rated U.S. CMBS in August declined marginally to 4.98%, down 11 basis points from July. However, the CMBS distress rate–the total delinquent and specially serviced loan rate–increased 32 bps to 8.36%.

In August, CMBS loans totaling $1.7 billion were newly added to the distress rate, of which 64.6% was due to imminent or actual maturity default. The office sector experienced the highest volume of newly distressed loans (54.5%, $928.8 million), followed by multifamily at 29.4% ($500.7 million) and retail at 11.9% ($203 million).

Although on a dollar basis office was far and away the leading sector for new CMBS distress this month, KBRA said multifamily saw the largest distress rate increase: 100 bps after declining 110 bps in July. The increase included the addition of 20 Broad St. ($220 million in the $1.6-billion Hamlet 2020-CRE1) as a newly specially serviced loan, as well as six loans totaling $141.8 million that were delinquent in June and brought current in July, but which subsequently transferred to special servicing.

Pictured: 20 Broad St. in Manhattan’s Financial District. Photo courtesy of ATTCK.

The Trepp CMBS Special Servicing Rate ticked up slightly in June, rising two basis points to 8.23%. Although the monthly increase was minimal, Trepp noted that it represents the sixth consecutive monthly increase. Prior to the COVID-19 pandemic, the last time the rate eclipsed this month’s 8.23% was January 2014, according to Trepp.

A few property types experienced more than modest change for good or bad in June. Mixed-use special servicing rose the most, up 40 bps in June to 9.34%. This is the first time the mixed-use rate has eclipsed 9.00% since July 2013. The office rate also rose in June, increasing 27 bps to 10.79% after its first decline of the year in May.

Two property types that saw material improvement were lodging and multifamily, with drops of 54 and 26 bps, respectively. Although the multifamily rate experienced some relief, it remains relatively high, still sitting above 5.00%. Retail continues to hold the highest special servicing rate at 10.82%, while at the other end of the spectrum sits industrial at 0.33%.

Office and retail CMBS loan defaults drove the overall default rate higher in 2023, Fitch Ratings said Tuesday. The total annual and cumulative U.S. CMBS loan default rates for 2023 increased to 0.9% and 18.5%, respectively, from 0.3% and 17.9% in 2022, due to increased maturity and term defaults primarily in office and retail, which continued to comprise the largest shares of overall default volume. Reduced CMBS issuance was also a factor.

Office default volume increased the most in 2023, to $4.8 billion (55.9% of 2023 default volume) from $1.6 billion (49.4%) in 2022. Most of the office defaults were at maturity in 2023 (60.4%; $2.9 billion), generally in line with 2022 (69.5%, $1.1 billion). Retail default volume in 2023 also increased to $2.55 billion (29.7%) from $1.1 billion (34.3%) in 2022, driven by a high concentration of regional mall defaults.

Although the office and retail sectors experienced substantially more defaults in 2023, the increases in the hotel, industrial and multifamily sectors were more modest, Fitch said. The three sectors combined accounted for less than 10% of overall defaults in 2023, down from 15% in 2022.

Pictured: The Gas Company Tower in Downtown Los Angeles. A Brookfield fund defaulted on $465 million of debt tied to the property in 2023.

The Trepp CMBS Special Servicing Rate dropped by six basis points in December 2023, falling to 6.78%. However, the long-term trend is still up: Trepp said the special servicing rate closed out 2023 with a total increase of 167 bps year over year.

Most property types actually saw reductions in their special servicing rate last month, aside from the mixed-use category, Trepp reported. After falling 104 bps in November to 6.66%, the mixed-use rate reversed in December, increasing 108 bps to 7.74%.

Most notable was office, which saw its first decline in more than a year, falling 42 bps from 8.87% to 8.45% in December. The retail rate also saw a substantial decline, falling 46 basis points to 9.37% in December.

Similarly, Kroll Bond Rating Agency (KBRA) reported earlier this month that the delinquency rate for KBRA-rated U.S. CMBS pulled back to 4.21%, fully offsetting November’s 19-bp increase. The total delinquent and specially serviced loan rate (the KBRA distress rate) also declined from November to 6.65%, a drop of 25 bps.

KBRA said the improved distress rate was broad-based, with five of seven sectors experiencing declines. The exceptions were multifamily and industrial, which increased for a second straight month.

In a bull market, RETS Associates principal Kent Elliott said the CRE unemployment rate has been — in some roles and sectors — even better than zero, much healthier than the national rate.

While some roles and sectors in the commercial real estate industry are seeing furloughs and layoffs and some employees are finding that good job interviews are few and far between, the industry overall may be in much better shape than the national average.

Of course, good data is hard to find, but according to RETS Associates principal Kent Elliott, the CRE unemployment rate is much lower than the overall unemployment rate, even in the midst of a pandemic. In fact, Elliott told Multi-Housing News in a recent interview that the rate in CRE could be as low as a third of the national rate.

“Currently, overall unemployment has spiked to around 13% and the CRE unemployment rate stands at roughly 4%,” he told MHN at the start of July. “That figure is the same as what the broadest sector of the economy stood at when it was healthy.

“You can’t find this data with the Bureau of Labor Statistics or anything like that,” he told Bisnow. “It’s just the sense that we have, as recruiters, being focused just on real estate, on where we think things are at this point in time.”

He said RETS is working with about half as many placements as it was last year at this time.  

“The first quarter [of 2020] was rock-solid,” Elliott said. “The second quarter was not as good. The sense is we’re at about 50% of where we were last year at this point.”

Across the RETS team of 15 recruiters, “nobody is at full capacity compared to last year,” he said. 

But this period of flagging activity follows a national unemployment rate of just 3.6% as of January 2020, at which point Elliott estimates the rate for CRE, was again much better: somewhere between 2% and, in some sectors and geographies, as low as negative 2% — meaning more jobs were available than there were skilled candidates to place.

Starting from such a strong position, even with the ravaging economic repercussions of the coronavirus, the industry would have a long way to fall.

CRE recruiters outside of RETS are divided on the 4% theory. Some think the estimate is too low given the extent of the downsizing they have witnessed. Others say it seems about right, based on the work piling up on their and their colleagues’ desks. It varies by job function (high-paying, high-risk positions are being cut more readily and hired more hesitantly now) as well as by city.

For example, the May unemployment rate in Las Vegas hovered around 30%, whereas in the D.C. metropolitan area it was more like 9% and in Lincoln, Nebraska, just 5%.

When it comes to pinning down the sprawling industry of commercial real estate, there is no clear data, as residential real estate is often lumped in, skewing the picture. According to data from the BLS, the real estate industry at large in the U.S. showed real estate at 3.3% unemployment in March, spiking as high as 8.9% by May, and then dropping to 7.4%.

However, CRE measures up against the national unemployment rate, searches happening at a 50% capacity are a shared experience. 

CRE-focused recruiter Carly Glova, resident and executive recruiter of Southern California-based firm Building Careers, said 2019 was the firm’s best year to date, both in terms of revenue and number of placements, and in Q1, it was on track to surpass that in 2020. But over the past several months, the open roles it is managing have also seen a decline of about half. 

“You compound COVID with the fact that now we’re in July,” Elliott said. “July and December are the two slowest hiring periods, so now you’ve got a double whammy. Half of [the slowdown] is COVID and half of it, it could be just normalcy.”

Of course, what may have been normal in July of last year is far from normal now. The Real Estate Roundtable 2020 Q2 Economic Sentiment Index registered a score of 38, confirming a dive in the industry’s read of market conditions.

“Although our Q2 survey results show there is hope for improved conditions within the next year, there are significant concerns that other sectors of the industry could be dragged down if jobs don’t rebound and government assistance tapers off,” Real Estate Roundtable President and CEO Jeffrey DeBoer told GlobeSt. 

Elliott said hiring interest is like a spigot, and as the world tries to regain its footing amid chaos, the flow remains in flux.

“I can feel all these things happening, almost from week to week,” he said. “This week, Wednesday morning, I had four calls with four new clients, discussing four new search opportunities. I had my recruiter from Phoenix on one of those calls, Charlotte on one, Denver on another and Newport on another. That’s a good sign.”