CMBS Distress Rate Climbs to 11.6%
The commercial real estate (CRE) sector continues to face headwinds as the latest data from CRED iQ reveals a rise in distress metrics for November 2025. The CRED iQ overall distress rate reached 11.63 percent, marking an increase from the previous month. This uptick underscores the persistent volatility in the market, driven largely by maturity defaults and sector-specific weakness.
The overall distress rate comprises loans that are either delinquent or specially serviced. For November, the delinquency rate stood at 8.78 percent, while the specially serviced rate was notably higher at 11.21 percent. The gap between these two metrics suggests that a significant portion of loans are being transferred to special servicing for imminent default risks or modification discussions before they technically fall behind on monthly payments.
Office sector remains the epicenter of distress
Breaking down the data by property type, the office sector continues to exhibit the highest level of stress, recording a distress rate of 17.55 percent. As remote work trends stabilize and lease rollovers occur in a high interest rate environment, office valuations face continued pressure.
Following office, the multifamily sector posted a distress rate of 10.8 percent, reflecting struggles with floating-rate debt and operating expense inflation. The hotel sector also remains in double-digit distress territory at 10.33 percent, while retail sits slightly lower at 9.08 percent. Conversely, niche asset classes continue to outperform, with industrial and self-storage remaining the most resilient sectors with distress rates of just 1.90 percent and 0.15 percent, respectively.
The ‘maturity wall’ in focus
Perhaps the most telling statistic for investors and lenders lies in the payment status of distressed loans. The data highlights that the current distress cycle is overwhelmingly a story of refinancing risk rather than pure cash-flow insolvency.
Nonperforming matured loans account for the largest share of the distressed universe, comprising 40.81 percent of all distressed loans. When combined with performing matured loans (17.91 percent), nearly 59 percent of all distressed CMBS loans are past their maturity date but have failed to pay off the balloon balance. This “maturity wall” indicates that while many properties may generate sufficient cash flow to cover debt service — evidenced by the 17.16 percent of distressed loans that are technically “current” on payments — they are unable to secure refinancing in the current capital markets environment.
For CRE investors and CMBS bondholders, the November data reinforces the need for careful credit monitoring, particularly in the office and multifamily heavy portfolios. With nearly 60 percent of distressed loans tied to maturity defaults, the market’s ability to clear this backlog will depend heavily on interest rate movements and the willingness of special servicers to extend or modify terms in the coming quarters.
Mike Haas is the founder and CEO of CRED iQ.
