Commercial mortgage delinquency rates in the office sector have climbed to 8.3 percent, the highest level since 2012, as remote and hybrid work arrangements continue to reduce demand for traditional office space. Lenders are bracing for further deterioration.
Several high-profile office buildings in major cities have been handed back to lenders or sold at steep discounts, putting pressure on commercial mortgage-backed securities. Investors are closely watching vacancy rates for signs of stabilization.
Some lenders are working with borrowers on loan modifications to avoid foreclosure, while others are tightening underwriting standards for new office loans.
