CMBS Delinquencies Cross 7%—and It’s Not Just Office Anymore

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Good morning. CMBS delinquencies hit 7.03% in April—the highest since early 2021. And it’s no longer just office. Multifamily and lodging are now flashing red, pointing to deeper cracks across CRE.

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Market Snapshot

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• Prime parcel: Woodlock Capital is selling a hotel development site located in downtown Charleston, SC. This irreplaceable site is a perfect fit for the apartment style hospitality sector. (sponsored)

• Lending activity: Blackstone Mortgage Trust originated $1.6B in new commercial real estate loans in Q1 2025, its highest level in over two years, with another $2B in deals expected to close soon.

• Job gains: U.S. payrolls added 177,000 jobs in April—beating expectations and signaling continued labor market resilience despite looming tariff uncertainty.

• End of an era: Warren Buffett will stay on as Berkshire Hathaway chairman while Greg Abel will take over as CEO starting January 2026, marking a long-anticipated transition.

• Budget cuts: Trump’s $163B budget proposal slashes domestic spending—including education, housing, and health—while boosting defense and border security, drawing sharp criticism from both parties.

• Private push: Amid global volatility, major asset owners are doubling down on private credit and infrastructure, leaning on outsourcing and strategic shifts to future-proof their portfolios.

• Raising the bar: Gen Z renters are reshaping the housing market by favoring design-forward, amenity-rich apartments that serve as all-in-one lifestyle hubs—blending work, wellness, and social life into one community.

• Steady start: AvalonBay posted a 4.8% rise in Q1 core FFO but warned that rising development costs—driven in part by new tariffs—could challenge future project viability.

• Getting creative: D.C. developers are overcoming funding cuts by using public land, zoning tweaks, and civic co-locations to keep affordable housing projects viable.

• Distressed deal: Three Steps Properties acquired the troubled Zo apartment tower in Oakland for $78M after the previous owner, Union Labor Life Insurance Co., took control through a deed-in-lieu foreclosure.

• Texas expansion: Altus Equity Group acquired 1,225 garden-style apartment units in Midland-Odessa, Texas, aiming for over 10% first-year yield amid strong regional growth and high occupancy.

• Steady growth: Extra Space Storage, Public Storage, and CubeSmart all posted Q1 YoY foot traffic growth, building on momentum dating back to 2019.

• Tariff shelter: Demand for bonded warehouses is surging as importers seek to delay costly tariffs under Trump’s trade policies, but with space maxed out and long certification timelines, latecomers are out of luck.

• Growing footprint: O’Reilly Automotive has purchased the 562,500-square-foot Westport 20 industrial warehouse near Fort Worth, Texas, from Nuveen, expanding its logistics footprint in a key distribution corridor.

• Soaring rents: Miami’s Design District has climbed to the fifth spot among the most expensive US retail streets, with retail rents surging 67% to $500 PSF last year.

• Trending: Multi-tenant retail continues to outperform single-tenant assets in 2025, driven by resilient fundamentals and strong investor demand.

• Don’t call it a comeback: Manhattan tenants leased 3.38M SF of office space in April, up 23% year-over-year, according to Colliers, signaling continued recovery in the market.

• Tenant trouble: Group RMC is facing mounting pressure on its suburban Chicago office portfolio after key tenant Follett slashed its space at Westbrook Corporate Center by 65%.

• Upswing: Fenway Capital Advisors has acquired Entrada, a premier office asset in LA’s Silicon Beach, in a high-priced deal that reflects growing investor confidence in top-tier office space.

• Earnings call: Host Hotels & Resorts, the country’s largest hotel-focused REIT, is preparing for a slower-than-anticipated summer season.

• Bet the house: Despite a 9% EPS dip, Vici Properties is raising its outlook for 2025 as it deepens investments in gaming and experiential real estate through major new partnerships and development deals.

📈 CHART OF THE DAY