**CMBS Special Servicing Rate Declines in August, While Office Sector Hits New High**
The Trepp CMBS Special Servicing rate declined moderately in August, dropping 19 basis points to 10.29%. This marks the second consecutive monthly decrease following an all-time high in June. However, the rate remains higher year-over-year, with increases across all property types compared to the previous year.
The primary driver of August’s decline is a reduction in the overall balance of loans outstanding, which decreased by nearly $14 billion to $583.0 billion from the prior month.
When broken down by property type, three sectors experienced notable changes. According to Trepp, lodging and mixed-use saw significant declines in special servicing rates. The lodging sector dropped 91 basis points to 9.10%, while mixed-use properties saw a decrease of 157 basis points to 10.64%.
In contrast, the office sector continued to struggle. The office CMBS special servicing rate rose by 70 basis points in August, reaching a new record high of 16.90%. On a year-over-year basis, the rate for office properties has risen sharply, increasing by nearly 500 basis points.
These shifting dynamics highlight the ongoing challenges and recovery efforts within commercial real estate, with some sectors stabilizing while others—like office—continue to face heightened stress.
