🚨 Office Pain Is Spreading to Multifamily
Foreclosures are rising, contracts are breaking, and builders are pulling back in the markets that ran hottest.
Capital is still moving, but the cracks are showing up in prices now.
CMBS distress has more than doubled since mid-2022, when it sat near 5%.
It climbed again in May to 11.86%, with new troubled loans entering the pipeline faster than existing ones are resolved.
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CBDs are absorbing most of the damage.
Distressed assets now account for more than a third of transacted CBD square footage since 2024, and nearly three quarters of repeat-sale CBD properties have changed hands at a discount.
The proof is showing up in real deals.
A multifamily REIT’s $280 million apartment sale just fell through, forcing it to pull its payout estimate and restart marketing from scratch.
Here’s where stress is turning into price discovery, failed sales, and the next set of distressed opportunities:
🏢 CBD Office Distress Deepens
📉 CMBS Distress Jumps to 11.86%
🔄 New Stress Outpaces Loan Fixes
💥 REIT’s $280M Sale Falls Apart
🏘️ Housing Supply May Outrun Demand
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Distressed sales now account for more than a third of transacted CBD office space since 2024, showing where falling values, hybrid work, and flight-to-quality pressure are creating the clearest price discovery.
The overall CMBS distress rate rose to 11.86% in May, more than double its mid-2022 level, as delinquency and special servicing both climbed across securitized commercial real estate.
New Stress Outpaces Loan Resolutions
Troubled CMBS loans are still being worked out, but new problem loans are entering the pipeline faster than old ones are being resolved, keeping pressure on office, mixed-use, lodging, and multifamily assets.
Elme Communities’ $280 million apartment sale fell through, forcing the dissolving REIT to withdraw its payout estimate and restart marketing on a key asset needed to repay its remaining loan balance.
Housing Supply May Outrun Demand
The MBA warns that slower household formation, aging demographics, reduced immigration, and new inventory could cause supply to outpace demand in some metros, putting pressure on future home prices.
Video of the week