The nation's CMBS market presents a split reality. Some smaller metros are sinking under extreme distress tied to single large loans, while major gateway cities continue to face structural pressures across their office and hotel sectors, according to CRED iQ.
CRED iQ describes this divergence as "a matter of bifurcation." Its latest analytics, covering 100 Core-Based Statistical Areas (CBSAs), reveal both isolated volatility and persistent metropolitan headwinds shaping credit performance nationwide. The firm's distress rate includes loans that are in special servicing, at least 30 days delinquent or in REO status.
A review of the top markets by CMBS distress rate underscores how uneven the landscape has become. San Juan-Caguas-Guaynabo, Puerto Rico, leads with a 100% distress rate driven by retail assets. Syracuse, New York, follows at 65.9% from office and retail exposure. In the Midwest, Minneapolis–St. Paul–Bloomington posts a 54.3% rate, also led by office and hotel. Youngstown–Warren–Boardman, Ohio–Pennsylvania, records 52% from retail, while Trenton–Ewing, New Jersey, comes in at 43.4%, mainly from office.
Further down the ranking, Oklahoma City reports a 36% distress rate fueled by hotel and retail, followed closely by Portland–Vancouver–Beaverton at 35.1%. Among larger metros, Chicago–Naperville–Joliet posts 22.7% distress, Denver–Aurora 22.4% and San Francisco–Oakland–Fremont 21%—all showing persistent pressure in office and hotel pools.
By contrast, distress levels fall to 11.6% for New York–Northern New Jersey–Long Island and 10.9% for Washington–Arlington–Alexandria. Los Angeles–Long Beach–Santa Ana records a rate of 10%, placing it among the least distressed major gateways.
Minneapolis–St. Paul–Bloomington's 54.3% rate marks the largest heavily distressed CBSA. Office loans lead with 72.7% distress, followed by hotel loans at 92.2%. CRED iQ attributes the weakness to "remote work disruption affecting suburban office demand and uneven hospitality recovery." Because the metro's elevated distress has persisted across multiple readings, the firm notes that this points to structural rather than cyclical deterioration.
Chicago's mix of 61.1% hotel distress and 30.9% office distress tells a story of deferred corporate real estate decisions and ongoing downtown leasing pressure. In Denver, where the 22.4% rate stems from 38.5% office and 63.1% mixed-use distress, CRED iQ links the weakness to "downtown redevelopment projects." San Francisco's 21.0% distress rate, long tied to post-pandemic office strain, reflects hotel distress of 30.6% and multifamily distress at 49.4%.
Borrowers on the 2021–2022 vintage multifamily debt, CRED iQ notes, face "classical refinancing stress" due to high loan-to-value ratios and initial low-rate financing.
The trio of New York, Washington, D.C. and Los Angeles remains "materially below" national distress leaders. New York's diversification across office, multifamily, retail and hotel has prevented any single property type from dominating its distress profile. Washington's office sector remains challenged as hybrid work reshapes federal leasing demand. In Los Angeles, mixed-use loans account for 27.6% of distress, followed by office at 14.5% and manufactured housing at 9.8%.
Nationally, across property types, office remains the most troubled. The average distress rate by category breaks down as office (21.2%), hotel (12.3%), mixed-use (11.8%), retail (11.1%), multifamily (6%), industrial (2.4%) and self-storage (0.05%). Manufactured housing, with a 3.0% distress rate, was relatively low but concentrated in a few markets.
The picture that emerges is one of uneven strain—some markets weighed down by a handful of failing loans and others contending with entrenched structural shifts reshaping property demand and financing stability.
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