Commercial real estate distress moved higher in May, reversing a brief improvement in April and highlighting the uneven nature of the market recovery.
CRED iQ's overall CMBS distress rate rose to 11.86% in May 2026, up from 11.08% in April, as both delinquency and special servicing increased across the Conduit and SASB universe.
The increase pushed distress back toward the elevated levels seen over the past year and underscored a continuing challenge for the market: troubled loans are being resolved, but new problem loans continue entering the pipeline.
CRED iQ's distress rate combines loans that are delinquent with loans in special servicing, capturing properties facing financial stress before a missed payment occurs. In May, the special servicing rate rose to 11.25%, up from 10.61%, while the delinquency rate increased to 9.53% from 8.95%.
The gap between special servicing and delinquency suggests many distressed loans are being actively managed before reaching a payment default. For lenders and investors, that early intervention can signal potential challenges ahead as borrowers navigate refinancing pressures and upcoming loan maturities.
The longer-term trend remains notable. The overall CMBS distress rate has more than doubled since mid-2022, when it stood near 5%.
Office properties remain the largest source of stress, with a distress rate of 17.11%, the highest among major property types tracked by CRED iQ. Mixed-use properties followed at 16.12%, while lodging reached 12.27%.
Multifamily distress also climbed into double digits, reaching 10.95%, as higher interest rates continue to pressure floating-rate and bridge-financed assets.
Retail distress stood below the overall market average at 9.97%, while industrial-related assets continued to show relative strength. Warehouse properties recorded a distress rate of 1.83%, industrial properties were at 1.04%, and self-storage remained nearly untroubled at 0.15%.
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