WSJ: Office Sector Facing Record High Delinquencies

The U.S. office vacancy rate is sitting at a record high of 14.1% and can be attributed to a move to remote and hybrid work, according to the WSJ. Office-backed CMBS delinquencies have increased to 11.8%, around 6 times higher than the rate in 2019. However, banks’ holdings of office properties are hovering around 5-7% delinquent, nonaccrual or modified. While some analysts feel that sector will normalize with time, others note that tenants are choosing to shrink their office footprint rather than expand, and there remain further uncertainties facing the CRE sector.

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