People in CRE have been wondering when the impact of macroeconomics and financial realities would mark the arrival of distressed properties.

An analysis by CRED iQ of the close to 400 metropolitan statistical areas in the US, with more than $900 billion in outstanding CRE debt, suggests that the answer is now.

Distress became more prevalent in a majority of primary markets during February 2023," the firm wrote. "Of the 50 largest MSAs tracked by CRED iQ, 34 of those markets exhibited comparatively higher levels of distress in commercial real estate loans than one month prior. The average month-over-month increase in distressed rates for these 34 markets was approximately 21 basis points. The Birmingham, AL MSA (+1.0%) exhibited the highest month-over-month increase in distress. Other notable markets with increased levels of distress this month included Pittsburgh (+0.8%), Memphis (+0.7%), and Los Angeles (+0.7%)."