{"id":2912,"date":"2023-02-07T15:31:29","date_gmt":"2023-02-07T15:31:29","guid":{"rendered":"https:\/\/cred-iq.com\/blog\/?p=2912"},"modified":"2023-02-07T15:31:29","modified_gmt":"2023-02-07T15:31:29","slug":"commercial-real-estate-market-delinquency-tracker","status":"publish","type":"post","link":"https:\/\/cred-iq.com\/blog\/2023\/02\/07\/commercial-real-estate-market-delinquency-tracker\/","title":{"rendered":"Commercial Real Estate Market Delinquency Tracker – January 2023"},"content":{"rendered":"\n
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CRED iQ monitors distressed rates and market performance for nearly 400 MSAs across the United States, covering over $900 billion in outstanding commercial real estate (CRE) debt. Distressed rates (DQ + SS%) include loans that are specially serviced, delinquent, or a combination of both. Distressed rates and month-over-month changes for data reported as of January 2023 are presented below for the 50 largest MSAs, broken out by property type for a granular view of distress by market-sector.<\/p>\n\n\n\n

Of the 50 largest MSAs tracked by CRED iQ, 27 of those markets exhibited month-over-month declines in the percentage of distressed CRE loans. The average decline among the 27 markets with lower distressed rates was -0.2%. Notable markets with decreased levels of distress this month included Portland<\/strong> (-2.2%), Washington, DC<\/strong> (-0.8%) and Birmingham, AL<\/strong> (-0.7%).<\/p>\n\n\n\n

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There were 23 markets with month-over-month increases in the percentage of distressed CRE loans. The average increase for these markets was +0.4%. The Charlotte<\/strong> MSA had the highest increase in overall distress this month (+3.7%), which was driven by adverse developments in the office sector. The Denver<\/strong> MSA additionally had a notable increase in distress (+1.9%) driven primarily by the office sector.<\/p>\n\n\n\n

For a more granular analysis of the Top 50 markets, CRED iQ further delineated individual markets\u2019 distressed rates by property type for a comprehensive view by market-sector. For a second consecutive month, deterioration in the office sector was a primary factor in increases in distress by market-sector. Metrics continue to worsen for the Denver<\/strong> office market. Last month\u2019s Market Delinquency Tracker<\/a> detailed the special servicing transfer of the $243.6 million Republic Plaza<\/a> office loan. More recently, a $277.1 senior mortgage secured by Wells Fargo Center<\/a> transferred to special servicing. These two credit developments pushed CRED iQ\u2019s Denver office distressed rate to 14.2%, which compares to 7.3% just two months ago as of November 2022. Aside from Denver, the Charlotte<\/strong> office market exhibited a swiftly elevated increase in distress after a $160 million mortgage secured by 301 South College Street<\/a> transferred to special servicing and a $120 million loan secured by Charlotte Plaza<\/a> defaulted at maturity.<\/p>\n\n\n\n

Another market-sector that was impacted by increased distress was the Tampa<\/strong> retail market. A $72.4 million loan secured by The Shops at Wiregrass<\/a>, a 729,324-SF lifestyle center became 30 days delinquent as of January 2023. The property was 80% occupied as of September and has been adversely impacted by in-line tenant turnover since 2020.<\/p>\n\n\n\n

Several hotel and retail markets continued to improve in January 2023. Three of the five largest percentage declines in distressed rates across market-sectors this month were lodging markets. Four of the 10 largest percentage declines were in retail markets. The Portland<\/strong> lodging market exhibited one of the sharpest declines in distress following a modification of a $51.9 million mortgage secured by the 205-key Westin Portland<\/a>. The loan had been with the special servicer since June 2020 due to pandemic-related distress but returned to the master servicer in December 2022.<\/p>\n\n\n\n

The Minneapolis <\/strong>MSA has the highest overall distressed rate at 20.4%, which was slightly higher than the previous month. Cleveland (10.7%), Birmingham <\/strong>(10.4%), Hartford <\/strong>(8.9%), and Milwaukee <\/strong>(8.7%) comprise the remaining markets with the highest rates of distress. For the second consecutive month, the Sacramento<\/strong> MSA (0.1%) is the market with the lowest percentage of distress among the Top 50 MSAs.<\/p>\n\n\n\n

For the full Market Deli<\/strong>nQ<\/strong>uency Tracker Report, download here:<\/p>\n\n\n\n