Office CMBS delinquency hits 13.2%, highest since at least 2019

Office CMBS delinquency reached 13.2 percent in August, the highest reading since at least 2019 and roughly 1.6 times the 8.2 percent posted across all property types, according to CRED iQ data reported by Commercial Observer. The rate sat at 8.1 percent in July 2024, most of the climb arriving between mid-2024 and mid-2025 before the figure settled into an 11.5-to-12.5 percent band from September 2025 through July; August broke that open.

The 13.2 percent includes loans that matured but are still performing, so about 3.4 points of the headline figure is maturity mechanics rather than credit; exclude those and office delinquency is 9.8 percent. Special servicing climbed to 15.7 percent, also the highest since at least 2019, from 14.9 percent a year earlier and 10.6 percent in July 2024. Behind the figures sits $189.6 billion of office debt across conduit, single-asset, single-borrower and CRE CLO deals, a census wide enough that the movement in it is hard to pin on a handful of towers; deals reported so far in September are running worse still, with delinquency above 14 percent and special servicing above 16 percent.

CRED iQ followed the 93 office loans that transferred while current and ahead of maturity between August 2024 and August 2025 to see what early intervention bought, and the answer is not much: through August 2026, 72 percent had gone 60 or more days delinquent or matured without paying off, while as of August, 43 percent were still delinquent or matured unpaid and 15 percent had returned to the master servicer and were current. Among loans already delinquent when they transferred, 92 percent reached serious delinquency, so an early transfer is only a modest improvement on a late one — the workout still ends in the same place for most of the loans, just later.

A fully leased building can still land in special servicing: Crossroads III in Sunnyvale, a $209 million loan on a building whose largest tenant is Apple, had already been extended once when it went to special servicing in August. One SoHo Square in Manhattan, backed by roughly $469 million of CMBS notes, transferred in late August while current and nearly two years ahead of its 2028 maturity. We covered that transfer when it happened, and the hotel loan deadline bundled into the same workout, as a case where the extension trade runs out of road.

Conduit office loans carry the worst of it: 14.4 percent delinquent and 18.5 percent in special servicing, against 10.7 percent and 11.5 percent for single-asset, single-borrower office. The gap likely reflects loan granularity and servicer workload as much as tenant quality — a conduit trust holding hundreds of smaller notes has to triage a stack of them, while a single-borrower deal gives its holder one asset, one sponsor and one set of documents to renegotiate. The 71 percent refinancing share cuts both ways: if the problem is the balloon rather than the rent roll, the fix is a new capital stack, and a conduit borrower with a $30 million note has fewer places to find one than the sponsor of a $200 million single-asset deal.

Private credit has occupied much of that slot: our reporting on RIVANI's Lincoln Road building showed private debt funding a lease-up the lender cannot control, and the Miami Beach refinancing we covered in September made a private credit fund the stabilized takeout on an 83-percent-leased office asset whose next 47,000 square feet required a municipal election. That capital has been the exit in the deals we have tracked this year, and the CMBS delinquency rate is in part a measure of how often it does not arrive on time.

September's remittance data will show whether August's jump was a step change or a reporting artifact of a heavy maturity month. If office delinquency settles in the low 14s and special servicing in the mid 16s, the 93-loan cohort and its 43 percent still delinquent or matured unpaid become the base case for the rest of the pipeline — and the extensions written in 2024 and 2025, which is what most of that early-transfer population is, become the special servicing transfers of 2027.