All major property types see rising stress in October, with multifamily topping 7 percent for the first time since 2015
The latest readout on commercial mortgage-backed securities shows that stress in income-producing real estate continued to build in October, extending a trend that has been in place for much of the past year. Trepp’s new CMBS Delinquency Report states the overall rate “resumed its climb,” rising 23 basis points to 7.46 percent, as both a higher delinquent balance and a shrinking outstanding balance pushed the metric to its highest point of 2025.
The total delinquent balance increased by $1.1 billion to $44.6 billion, while the pool of outstanding CMBS loans fell $3.2 billion to $598.1 billion. The combination amplified the monthly rise in the delinquency rate. Serious delinquencies—loans 60-plus days late, in foreclosure, REO, or non-performing balloons—reached 6.99 percent, up 24 basis points.
Year over year, the overall rate is up 148 basis points, from 5.98 percent in October 2024. Six months ago, the figure stood at 7.03 percent. Trepp noted that “our figures assume defeased loans are still part of the denominator unless otherwise specified.” Removing defeased loans would put the headline rate at 7.65 percent, up 22 basis points from September. Including loans that have passed maturity but remain current on interest—categorized as performing matured balloons—would lift the overall rate to 8.92 percent, though that adjusted figure fell 56 basis points from the prior month.
According to the report, new delinquencies in October exceeded $4 billion, outpacing $2.6 billion in cures. Office accounted for the largest swing: more than $1.7 billion of office loans became delinquent, while about $760 million returned to performing status. Multifamily saw $530 million in new delinquencies and $220 million in cures, leaving a net increase above $300 million, while no other property type posted a net change greater than $30 million in either direction. The share of loans 30 days delinquent held nearly steady at 0.47 percent, down one basis point from September.
Office once again drove the overall deterioration. The sector’s delinquency rate jumped 63 basis points to 11.76 percent, reaching a new record after brief relief in September. Trepp points out that earlier peaks of 11.08 percent in June and 11.66 percent in August have now been surpassed. The CMBS 2.0+ subset shows a similar trajectory—office delinquencies climbed 64 basis points to 11.66 percent. This segment’s broader delinquency rate rose to 7.36 percent, up 22 basis points, and would stand at 7.54 percent if defeased loans were excluded.
The second-largest monthly move came in multifamily, where delinquencies increased 53 basis points to 7.12 percent—the first time the sector has crossed 7 percent since December 2015. Trepp’s CMBS 2.0+ data shows a nearly identical jump of 52 basis points.
Meanwhile, lodging delinquencies rose 26 basis points to 6.07 percent (and 6 percent in CMBS 2.0+). Retail increased 13 basis points to 6.6 percent in the newer-issue cohort, while industrial saw a smaller uptick of eight basis points, bringing the industrial rate to 0.64 percent. Even with the rise, industrial remains the strongest-performing major sector by a wide margin.
Most of October’s movement reflects sector-specific challenges rather than broad economic shocks. Office continues to carry the heaviest burden, with maturing loans and weak absorption contributing to the sector’s disproportionate share of new delinquencies. Multifamily’s increase signals that higher operating and financing costs are weighing on properties that had been relatively resilient. Lodging, retail and industrial posted smaller changes, though each moved modestly higher.
With delinquencies rising in all major property types and serious delinquencies nearing 7 percent, the October report points to continued pressure across commercial real estate credit. While cures remain active, they were not enough to counter new problem loans in key categories. Unless transaction activity, refinancing conditions, or property-level performance improve meaningfully, the data suggests delinquency levels may stay elevated into early 2026.
