Office CMBS delinquency hits 13.2%, highest since at least 2019; half of troubled loans were still paying

The share of office loans in commercial mortgage-backed securities that are delinquent reached 13.2% in August, the highest reading since at least 2019 and up from 8.1% in July 2024, according to data from CRED iQ reported by Commercial Observer. That is about 1.6 times the 8.2% rate across all property types. The figures cover $189.6 billion of office debt.

The rate had held between 11.5% and 12.5% from September 2025 through July before jumping in August, and office deals that have reported so far in September show delinquency above 14%. The special servicing rate, which counts loans handed to the specialists who work out troubled debt, rose to 15.7%.

The number that matters: loans that were still paying

The headline counts late payments. The more revealing figures are about loans that had not missed one:

• 71% of distressed office balance is tied to a failed or imminent refinancing rather than missed payments.
• 51% of office loans sent to special servicing in the past 12 months were still current when they moved, a median of about 11 months before maturity. The year before, it was 42%.
• Of 93 loans that transferred while current between August 2024 and August 2025, 72% went on to be 60 or more days late or to mature unpaid. Only 15% were back with the regular servicer and current by August.
• Among current-at-transfer loans under $100 million, 74% defaulted at some point.

So "current" is not the reassurance it sounds like. A loan that is paying today but cannot be refinanced at maturity has turned out to be only modestly safer than one already in default. Even full buildings are affected: CRED iQ points to a $209 million loan on a fully leased Sunnyvale, California, property whose largest tenant is Apple, which received a notice of default on Sept. 1.

Why the refinancing math keeps getting worse

Many conduit loans run ten years. Using the Treasury's own daily yield curve, here is the base rate a borrower faces at refinancing against the base rate when loans now coming due were written:

CNBC reported the 10-year at 5.219% on Monday morning. Against a 2019 base, that is about 3.2 percentage points of added cost before any lender spread. On a $20 million loan, the base rate alone adds about $640,000 a year in interest (our calculation), at a time when office income has not risen to match. That is why most of the distress is showing up at maturity dates.

Who it hits beyond the bondholders

For a small firm renting office space, a landlord in special servicing is not an emergency by itself: a loan moving to a special servicer does not change the tenant's lease. The practical risk is slower decisions and less money. Tenant improvement allowances, renewal terms and repairs can stall while a special servicer controls the building. A dental practice, an accounting firm or a law office with a renewal in the next year has a reason to ask its landlord directly whether the building's loan matures soon, and to get any promised improvement money in writing with a date.

For lenders and investors, CRED iQ's data suggest the delinquency rate will keep rising while long rates stay above 5%, since the loans at risk are identified by their maturity dates, not by missed payments. Rates background: 10-year yield chart and what a 5% 10-year means for a loan reset.

Sources: CRED iQ via Commercial Observer; U.S. Treasury; CNBC. Rate-gap and interest figures are our calculations. This is market information, not investment advice.