The CRE Distress Heatmap

The CMBS distress rate is no longer an abstraction. At nationally—up from 12% at the start of the year—it has reached levels that CRED iQ was forecasting for year-end. Office and hotel loans are driving the headline, but the geographic dispersion tells a richer story: distress is not evenly distributed, and the banks most exposed to it are not always the ones you’d expect.

We mapped of conduit and single-borrower CMBS loans across U.S. metro areas using the same CredIQ loan-level data that powers CRED iQ and Trepp. Our delinquency rate (8.95%) is within 45 basis points of CRED iQ’s January figure; our special servicing rate (12.9%) reflects five additional months of deterioration.

Then we overlaid the CRE lending books of 179 publicly traded banks. For each bank, we computed a distress exposure score: the weighted average of CMBS distress rates across every metro area where the bank has on-book commercial real estate.

Where Distress Is Concentrating

The map below shows every metro area with at least $1 billion of CMBS exposure and 10 or more loans. Bubble size represents the dollar amount of distressed loans; color represents the distress rate. Click any bubble for the breakdown by property type.

The geography of CMBS distress is surprisingly uneven. leads the nation at , driven by concentrated hotel and retail exposure. But the largest absolute pools of distressed debt sit in gateway metros—New York, Chicago, Los Angeles—where even moderate distress rates translate to billions of dollars in troubled loans.

Office and Hotel: The Twin Engines of Distress

Office leads all property types at a distress rate, with in distressed loan balances. But hotel is close behind at —and on a per-loan basis, hotel loans are failing at a higher clip. Meanwhile, industrial remains remarkably healthy at just , and multifamily sits at , buoyed by strong rental demand despite rising rates.

Bank Distress Exposure: The Top 5

The table below scores each bank by the overlap between its CRE lending book and distressed markets. A higher score means a larger share of the bank’s commercial real estate loans sit in metros with elevated distress signals.

This is not a prediction of bank losses—it is a measure of geographic exposure to markets where distress signals are already elevated. The most exposed banks tend to be mid-size institutions concentrated in one or two high-distress metros.