Sundown? Volume of CMBS Delinquency Increased 49.4% During 10 Months Through October (Office Sector Delinquency Rate UP 261% Over 10 Months)

Confounded Interest ^ | 11/24/2023 | Anthony B. Sanders

[Kaiser8408a]

Is it sundown for the US commercial real estate market?

According to Trepp, the volume of CMBS delinquency increased 49.4% during 10 months through October.

Looking for more? This piece has been taken from Trepp and Commercial Real Estate Direct’s Q3 2023 Quarterly Data Review. Access the magazine here.

The volume of CMBS loans that are classified as delinquent increased by 49.4% during the 10 months through October to $27.91 billion. That volume amounts to 5.07% of the $601.98 billion universe tracked by Trepp. In contrast, delinquencies at the end of last year amounted to 3.03% of the $616.15 billion universe then extant.

Office Sector Drives Increase in Delinquency Volumes

The driver of the increase was the office sector, which had a 261% increase in delinquency volumes over the 10-month period through October. A total of 199 loans with a balance of $9.59 billion, or 5.91% of all CMBS office loans were at least 30 days late with their payments, as of the end of October. At the end of last year, 115 loans with a balance of $2.65 billion, or 1.63% of office loans, were delinquent.

The sector’s prospects are unlikely to improve as office occupancy rates have declined in most of the country’s major markets. That’s been driven by a substantial pullback in demand from office-using tenants.

Hit especially hard have been loans with floating coupons that are maturing and need interest-rate cap agreements in place before they qualify for term extensions. Those rate caps have skyrocketed in price in lockstep with interest rates.

I wonder if Fed Chair Jerome Powell likes it like that!

[patriot torch]

But hey, according to the lying mouthpiece known as whitehouse spokeslier, bidenomics is working. lol

[leaning conservative]

It is working! To empty our wallets at a record pace. Get less, pay more. Yay us....

[Sirius Lee]

[TheWriterTX]

Anecdotal, I know, but resale revenue is down 40% according to friends in the industry.

Here in Texas, when you buy into an HOA, a person typically orders a resale disclosure. This provides you with important information about the home and community.

Because they are part of the state statutes and there is a liability that comes from creating one, most management companies charge for them.

The last time the Texas market saw this type of slowdown was 2007. The HOA management companies saw it coming before Wall Street did.

[cgbg]

The solution is the bosses need to order their slaves (er employees) to start obeying and reporting to their urban office tower cubicles.

Nothing says “productivity” more than long commutes.

Lol.