The commercial real estate (CRE) market continues to experience significant financial stress, with office CMBS (Commercial Mortgage-Backed Securities) delinquencies recently spiking to 11.7% in August—surpassing even the peak levels seen during the Global Financial Crisis, according to Trepp data. Multifamily delinquency rates have also jumped sharply, reaching 6.9%, their worst level since 2015, as property value challenges, interest rate hikes, and rising operating costs hit the sector.[1]
CRE Market Under Pressure
A combination of market dynamics is driving up loan defaults across both office and multifamily sectors. In office real estate, the "flight to quality" phenomenon has pushed tenants from older towers into newer, well-amenitized buildings. This trend, alongside persistent high vacancy rates and financing hurdles, has led to rising delinquencies in office CMBS loans. Office properties originating loans in the low-rate environment of recent years now struggle to refinance as rates have spiked, placing borrowers and investors at risk.[1]
In the multifamily sector, the story is equally concerning. The past few years saw rapid expansion of new apartment projects, resulting in higher vacancy rates and excess supply. At the same time, property owners face the dual challenges of elevated interest rates and surging insurance costs, which are undermining profitability and pushing more loans into delinquency. Even as rents increased substantially between 2021 and 2022, those gains have been outpaced by expense growth, further straining cash flows for multifamily landlords.[1]
Importantly, the ultimate risk for these loans increasingly sits with institutional investors and government entities such as Fannie Mae and Freddie Mac, rather than commercial banks. This shift reduces the potential for systemic banking sector risk but concentrates losses among bond funds, insurers, and federal agencies.[1]
“Extend-and-Pretend” Tactics
Amid these challenges, “extend-and-pretend” and forbearance strategies—whereby lenders modify loan terms or temporarily suspend payments—have become commonplace to delay the recognition of distressed assets. While these tactics can move loans temporarily off delinquency lists, they ultimately defer the underlying risk and may not be enough to prevent future losses as market pressures persist.[1]
Why Investors Need Advanced Risk Tools
In an environment of mounting delinquencies and market uncertainties, having access to accurate and timely loan performance predictions is essential for risk managers, investors, and lenders. The complex interplay of interest rates, property valuations, geographic supply dynamics, and tenant demand makes it increasingly difficult to assess the likelihood of future defaults without advanced predictive analytics.
Traditional credit risk models may not capture the impact of unprecedented market volatility, regulatory changes, or operational mismanagement. Relying solely on historical performance or generic stress tests can leave investors vulnerable to unexpected losses—especially in a market marked by rapid shifts in fundamentals like the current CRE landscape.
Introducing CRE Loan Predictor by RiskInMind
RiskInMind’s innovative CRE Loan Predictor offers a solution tailored for today’s volatile environment. This AI-powered platform leverages dynamic market data, property-specific variables, and macroeconomic trends to deliver actionable default probability predictions for CRE loans. Whether analyzing office towers, multifamily apartment complexes, or retail assets, RiskInMind’s predictive calculator helps users quantify real-time risk exposure and identify early warning signals before problems escalate.
With CRE Loan Predictor, risk management teams and investors can:
- Assess individual loan default likelihood with industry-leading accuracy[1]
- Simulate the impact of changing interest rates, vacancy rates, and operating expenses
- Perform scenario analyses on loan portfolios across sectors and geographies
- Get automated alerts for high-risk assets, enabling proactive decision-making
In today’s uncertain CRE market, staying ahead of risk requires more than traditional methods—it demands powerful AI-backed insights and transparent, data-driven analysis. Visit riskinmind.ai/products/cre-loan-predictor to see how you can transform your CRE credit risk strategy and gain the confidence to navigate market turbulence with clarity.[1]
Rising delinquencies and evolving risks don’t have to catch investors by surprise. With RiskInMind’s CRE Loan Predictor, equip yourself with the most cutting-edge tools for CRE loan default prediction, and make smarter, faster decisions in a challenging market.[1]
Sources [1] Office CMBS Delinquency Rate Spikes to Record 11.7%, ... https://wolfstreet.com/2025/09/01/office-cmbs-delinquency-rate-spikes-to-record-11-7-much-worse-than-financial-crisis-peak-multifamily-delinquencies-also-spike/