**Rise in CRE Distress Hasn’t Led to Increase in Distressed Sales**
Although delinquency rates are rising among commercial real estate (CRE) loans, the uptick has not yet translated into a significant increase in distressed property sales, according to a recent Research Brief by Marcus & Millichap.
At the end of the second quarter, the volume of distressed CRE rose by approximately $25 billion compared to the same period last year. However, levels actually saw a slight decrease from the first quarter, based on data from Real Capital Analytics.
Office properties continue to face the highest levels of distress, comprising 47% of the $122 billion total. By comparison, multifamily, retail, and hospitality sectors each accounted for between 13% and 19%. Industrial assets remain relatively stable, representing only 2% of the distressed property market.
One of the key factors keeping distressed sales relatively subdued is favorable borrower conditions. In the first half of 2025, distressed sales accounted for only about 2.6% of total trade volume—comparable to figures seen in 2016.
“Lender leniency may be helping keep the share of such sales relatively low,” Marcus & Millichap reported. “Compared to the aftermath of the Global Financial Crisis, debt capital in 2025 has generally remained available, and many lenders continue to offer loan workout options to borrowers in good standing.”
These factors are contributing to a more stable landscape for commercial real estate, despite the rising pressures some sectors continue to face.
