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 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.

The Trepp CMBS Special Servicing Rate rose 33 basis points to 8.79% in September. This was the ninth consecutive monthly increase and the second-largest uptick of 2024, the firm reported.

Distress was consistent throughout, with the respective special servicing rates of the five major property types all increasing. Although these increases varied in degree, four of the five property types increased by at least 30 bps. Driving the overall September increase was office, which surged 67 bps to 12.58%.

The office rate is now up more than 200 bps over the past four months alone, with distress continuing to mount. More than half the September dollar amount of new transfers to special servicing occurred in the sector, according to Trepp.

The multifamily rate rose 36 bps to 6.07%, surpassing the 6% mark for the first time in nearly nine years. Furthermore, the retail rate reached a near two-year high of 11.22%, and the lodging rate hit a two-year high of 7.84%. Even with an 11-bp increase in September, though, industrial CMBS in special servicing still comes in below 1%.

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%.

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.