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Easing has begun, but credit remains tight: modified CRE loans are up +66% YoY and office CMBS delinquencies just jumped to 8.1% in September. Borrowing costs are easing at the margin while risk premiums stay sticky — a combination that demands conservative underwriting.
📊 Quick Dive
25 bps cut to 4.00–4.25%; markets price a near-certain additional 25 bps this month.
Office CMBS delinquency rose to 8.12% in September (from 7.70%), helping push overall CMBS to 3.1%.
10-yr UST ~4.1% vs ~4.8% early ’25; cap rates largely unchanged as spreads remain wide.
Read the full Signal
Commercial Property Values Find a Footing
Green Street’s all-property CPPI ticked +0.2% in September and is +2.9% YoY, suggesting values have stabilized ~15–20% below 2022 peaks. Bid-ask spreads narrowed under 3%, helping H1’25 sales reach $163.6B (+16% YoY), led by large deals. Stabilization is broad but uneven: industrial and multifamily are firming faster; office remains the laggard Read Full Signal →
Multifamily Rents Flatten as Record Supply Hits
Average U.S. asking rent slipped $6 MoM to $1,750 in September; YoY growth slowed to +0.6%, the weakest since 2009. Deliveries over the last 12 months reached ~474,800 units, nudging occupancy to 95.4% and pushing concessions to ~22% of properties (avg ~6% off). Sun Belt leaders like Denver (-4.3%) and Austin (-4.0%) posted YoY rent declines. Read Full Signal →
$1B Industrial Portfolio Refi Signals Lender Confidence
Investcorp refinanced ~14.1 MSF across 128 U.S. industrial assets with a $1.0B loan led by Morgan Stanley. Fundamentals are cooling but healthy: vacancy ~4.4% (+~10% YoY), 64 MSF delivered in Q3, leasing volume -3.2% YoY, and STNL industrial caps around ~7.2% — steady to slightly tighter for prime credits. Read Full Signal →
NYC Office Default Triggers Delinquency Spike
A $180M CMBS maturity default at 261 Fifth Ave helped drive office delinquencies to 8.12% in September and added to $2.05B in new CRE delinquencies across property types. Banks and ratings shops are tightening around office exposure, with select CMBS deals on downgrade watch — and refinancing windows narrowing to ~50–55% LTV for many assets Read Full Signal →
Rate relief is arriving, but the playbook is discipline over beta. Underwrite with exit caps +50–100 bps, DSCR ≥1.4×, and ≤60–65% LTV on new money; assume flat rents where supply is heavy (Sun Belt MF) and longer downtimes in office. Operators should secure debt early (portfolio refis for industrial are getting done), pivot leasing toward occupancy over rate, and budget higher TI/LC in office. Dry powder should target infill industrial and necessity retail, while office strategies bifurcate: double-down on savable assets; advance reuse studies on the rest
Oct FOMC (Oct 28–29): Markets lean to another 25 bps cut; watch dot-plot rhetoric on pace.
Credit Transmission: Track loan mods and special servicing — office delinquency trend into Q4 is pivotal.
Supply Overhang: Multifamily concessions likely persist into 2026 until pipeline burn-off accelerates.
Industrial Balance: Starts slowing should cap 2026 vacancy; watch leasing velocity in big-box vs infill.
