America‘s Commercial Real Estate Show Trepp's Loan Delinquency Update & Forecast for 2025
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Jan 14, 2025 Lonnie Hendry, an expert at Trepp, shares his insights on rising loan delinquency rates in the commercial real estate market, particularly the office sector's alarming 11% rate. He discusses strategies for revitalizing distressed properties and the potential for recovery by 2025. The conversation highlights the impact of interest rates on loan origination trends and the optimism surrounding CMBS markets. Hendry navigates complex borrower-lender dynamics amid economic challenges, hinting at a more active market ahead.
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Delinquency Rates and Office Sector Distress
- The overall CMBS delinquency rate is 6.57%, up from the start of 2024 but below the 2012 peak of 10.32%.
- The office sector's delinquency rate hit a record high of 11.01%, exceeding the previous 2012 high.
Office Distress and Potential Market Activity
- Office sector distress is substantial, with $17 billion in delinquent CMBS office loans.
- Some sellers are starting to accept lower prices, potentially leading to increased activity in 2025.
Positive Office Trends and Government Influence
- Positive indicators for the office market include return-to-office mandates by companies like Amazon and JP Morgan.
- The new Department of Government Efficiency (DOGE) may influence government leasing and office usage.