In September, the special servicing rate for CMBS loans tracked by Trepp rose to 8.79%, an increase of 33 basis points from the previous month. This marks the ninth consecutive monthly increase and is one of the largest upticks seen in 2024 so far.
The rise in distress was consistent across all five major property types, with each seeing an increase in their respective special servicing rates. While these increases varied in degree, four out of five property types saw a jump of at least 30 bps. The office sector had the biggest impact on this overall rise, with a surge of 67 bps to reach a rate of12.58%.
This brings the office rate up more than200 bps over just four months and indicates that distress continues to mount within this sector. In fact, more than half of all new transfers to special servicing occurred within this sector during September alone.
The multifamily sector also saw an increase in its special servicing rate by36 bps,to reach6 .07%. This is significant as it surpassesthe6% mark forthe first timein almost nine years.The retailsector also reacheda near two-year highof11 .22%,whilethelodgingratehitatwo-yearhighof7 .84%.Despitean11-bpincreaseinSeptember,theindustrialCMBSinspecialservicingstillremainsbelow1%.Overall,this data highlights that CMBSspecialservicinghasincreasedfortheninthconsecutivemonthandthatdistresscontinuestoimpactallmajorpropertytypesacrosstheindustry.
