CMBS Delinquencies Edge Higher in March as Maturity Pressures Build

After a short-lived reprieve, CMBS delinquency rates are back on the upswing, with multifamily loans and looming maturity defaults leading the charge.

Jordan B.
April 28, 2025

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Good morning. After a short-lived reprieve, CMBS delinquency rates are back on the upswing, with multifamily loans and looming maturity defaults leading the charge.

Today's issue is sponsored by AirGarage—maximize parking revenue at your property.

🎙️ Don Tepman — better known as Strip Mall Guy — joins No Cap to share how he turned viral internet fame into raising $150M+ LP capital and built a thriving CRE brand around strip malls — all without ever making a cold call.

Market Snapshot

S&P 500

GSPC

5,525.21

Pct Chg:
+0.74%

FTSE NAREIT

FNER

748.02

Pct Chg:
-0.11%

10Y Treasury

TNX

4.262%

Pct Chg:
-0.004

SOFR

30-DAY AVERAGE

4.32%

Pct Chg:
-0.00

*Data as of 04/25/2024 market close.

Loan Maturity

CMBS Delinquency Rates Rebound Sharply in March 2025

After a brief decline, CMBS delinquency rates are once again on the rise, with multifamily loans showing notable weakness.

Back on the rise: Trepp reports the overall CMBS delinquency rate increased by 35 basis points in March 2025 to 6.65%, reversing two months of improvements. The total delinquent loan balance hit $39.3 billion, up from $36.0 billion the month prior, pushing rates close to a four-year high.

Source: Trepp

Multifamily in the hot seat: Multifamily delinquencies surged by 98 basis points in March, reaching 5.44%—a sharp rise from 1.84% a year ago. This marks the sector’s worst performance since late 2015, underscoring growing stress despite solid fundamentals in other areas of the housing market.

Lodging and retail see pressure: The lodging sector's delinquency rate jumped by 76 basis points to 7.19%, while industrial and retail sectors posted more modest increases of 26 and 33 basis points, respectively.

Office is having its moment: In contrast, the office sector, long a trouble spot, saw its delinquency rate fall slightly for the third straight month, ticking down two basis points to 9.76%. Nonetheless, office remains the most distressed major property type.

➥ THE TAKEAWAY

Zoom out: While short-term delinquencies are easing, the growing share of loans lingering past maturity is flashing warning signs. The adjusted delinquency rate rising to 8.37% suggests maturity defaults are quickly becoming the next big pressure point for the CMBS market.

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✍️ Editor’s Picks

Confidence collapse: CRE finance sentiment plunged 30.5% in Q1—its second-largest drop on record—as tariff fears and economic uncertainty rattled industry leaders.
NYC resi report: Hudson Yards stayed NYC’s priciest neighborhood in Q1 2025, while Little Italy jumped to No. 2 with a $4.6M median sale price.
Crypto + CRE: CRE is cautiously reembracing crypto, with $ 529,000 in bitcoin recently used for a Miami condo sale and $4 trillion in real estate expected to be tokenized by 2035.
Tariff trouble: Fed Governor Christopher Waller said he would back rate cuts if Trump’s new tariffs trigger widespread layoffs and a significant rise in unemployment.

🏘️ MULTIFAMILY

Tax crackdown: Houston’s Housing Authority halted controversial developer tax breaks after finding some projects saved $1.38M in taxes while delivering just $405K in rent savings.
Global appetite: Despite 63% of foreign investors expressing a negative outlook for U.S. cross-border investment in 2025, 44% still plan to boost their U.S. multifamily holdings, drawn by strong fundamentals.
Market stabilization: Jacksonville's multifamily sector absorbed a record number of units in Q1 2025 amid a construction slowdown, setting the stage for rent growth and market stability later this year.

🏭 Industrial

Wrong direction: Philadelphia’s industrial market is under pressure as vacancy rates surged 140 basis points YoY to 9.4%, with soft absorption and rising construction deliveries threatening further turbulence.
Hot new trend: Industrial sales to owner-occupiers jumped 32% in the past year, as tariffs and customization needs drive manufacturers to buy instead of lease.
Power it up: Philip Morris’ $600M Zyn factory has gone vertical in Aurora, part of a surge that now sees 68% of Denver’s industrial construction clustered near the airport.
High demand: U.S. durable goods orders jumped 9.2% in March, fueled by a 139% spike in commercial aircraft demand, even as tariffs darken the broader economic outlook.

🏬 RETAIL

Retail shifts: Retail cap rates mostly declined in Q1 2025, led by banks and auto parts stores, while convenience stores bucked the trend with a slight uptick amid major tenant shakeups and reduced supply.
Malls are retooling: Orange County malls are pivoting to mixed-use, part of a national trend where over 200 malls have already added housing to their former retail sites.
Suburban surge: Lincoln Property Company will build a 43,700-square-foot Napa-inspired retail center in Alpharetta, tapping into metro Atlanta’s tight 4% retail vacancy.

🏢 OFFICE

Special servicing: Even office properties with strong occupancy and solid rents are being placed in special servicing as high interest rates, refinancing challenges, and falling valuations disrupt the market.
SF revival: DivcoWest and Blackstone scored San Francisco’s first $100M+ office deal post-pandemic, buying 199 Fremont for $111M amid steep market discounts.
Debt pressure: Sterling Bay listed its fully leased 311 West Monroe tower ahead of an $82.5M loan maturity, with debt service now outpacing its $4.3M annual cash flow.
Hot project: BXP’s new D.C. office project at 725 12th St. NW is already 87% preleased after Cooley LLP signed a 126K SF, 20-year lease, underscoring tight demand for top-tier space.

🏨 HOSPITALITY

Big win: Eyal Ofer can now move to sell the Mondrian Park Avenue Hotel for up to $150M after winning a four-year legal battle.
Distress deal: Investor Deepak Paul Khanna bought the 318-key Crowne Plaza Northbrook for $6.5M — a 50% discount from its 2021 sale price — after a contentious foreclosure.

📈 CHART OF THE DAY

According to CBRE, post-COVID, smaller office buildings (<50K SF) with 90%+ occupancy fueled sales despite high vacancies overall, breaking historical trends before higher rates cooled the market.