More Than Just Office Trouble

The CMBS delinquency rate hit 7.03% in April, a 38-basis-point increase from March and nearly 200 basis points higher than a year ago. That translates to over $41.9 billion in delinquent loans, according to Trepp.

While office remains the most distressed at 10.28%, April’s spike was largely driven by multifamily and lodging—sectors that had previously shown resilience. The trend suggests that distress is broadening, not just deepening in one sector.

Key Takeaways for Investors

Here’s what stood out in the latest Trepp data:

• Multifamily Spikes: Delinquencies rose to 6.57%, up from just 1.33% a year ago.
• Lodging Falters: Hotel loans jumped to 7.85%, signaling renewed stress in travel demand.
• Office Still Leads in Pain: At 10.28%, office remains the highest-risk sector.
• Retail and Industrial Stabilize: Retail improved to 7.12%, while industrial held steady at 0.50%.

Multifamily’s deterioration is the clearest sign yet that 2025’s challenges are spreading.

Rethinking “Defensive” Assets

For the past few years, multifamily has been considered a defensive asset—sheltered from the volatility hitting office and retail. That thesis is now under pressure.

High interest rates, tighter refinancing windows, and rising operational costs are straining multifamily loans, especially those originated at peak valuations. Investors will need to sharpen their focus on fundamentals, financing terms, and market selection.