It’s not unusual for ratings agencies to interpret any hint of a downturn in the U.S. commercial real estate market – including Philly office space and Philly retail space – as a possible long-term trend. So it should come as little surprise that several ratings firms are warning investors to prepare for the long run of improvement in CMBS delinquency and payoff numbers to possibly be ending.
CMBS delinquencies in the U.S. and Philadelphia commercial real estate market rose for the first time in 10 months with further fluctuations on the horizon, according to the latest results from Fitch Ratings. At the same time, Morningstar is noting that the payoff rate of loans coming to maturity is starting to decline and could be headed lower. Although it remains unclear whether the recent metrics reflect the softness from the global investor pullback during the first part of the year, or something more.
This report on national and Philadelphia commercial properties was made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
By Fitch Ratings’ numbers, loan delinquencies in U.S. and Philadelphia commercial real estate properties rose two basis points in April to 2.92% from 2.9% a month earlier. While relatively small, the increase still marks the first increase in its index since June of last year. New delinquencies of $494 million exceeded resolutions of $353 million.
Delinquencies involving the office and hotel segments of national and Philadelphia commercial real estate listings were the only two property types to see an increase, with office going to 4.16% from 4.08% and hotels to 3.59% from 3.2%.
Fitch expects the CMBS delinquency rate in the U.S. commercial real estate market to fluctuate during the year but still remain below 3% by year end, largely resulting from potential delinquencies of larger balance loan transfers to special servicing.
In contrast, resolution activity nationally last month – including Philly office space and Philly retail space – was mainly where the average loan balance was roughly $7 million.
Morningstar Credit Ratings also noted that specially serviced exposure rose $1.36 billion to $28.35 billion across 1,688 loans related to U.S. and Philadelphia commercial real estate listings. The study indicated this is a trend Morningstar believes portends future volatility.
For more information about Philly office space, Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) Leor Hemo (leor.hemo@wolfcre.com) or Lee Fein (lee.fein@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space and Philly retail space.
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