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Fri. Jul 19th, 2024

Denver Metro Among Cities With Highest Concentration of CMBS Problems

By meerna Jul11,2024
Denver Metro Among Cities With Highest Concentration of CMBS Problems

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Denver’s commercial real estate delinquency rate is higher than the national average, Trepp said. 10.5% of buildings in the metro area that are financed with CMBS are delinquent.

The country’s 25 largest metropolitan areas have a crime rate of less than 6.2%.

Office properties account for the largest percentage of distressed properties in the Denver metro area, with 29.7% of office buildings in default, according to Vivek Denkanikotte, a research associate at Trepp. That’s the third-highest number among the 50 largest metros.

According to Thomas Taylor, senior researcher at Trepp, the biggest culprit is remote working.

Hybrid work schedules have taken a toll on the office market in nearly every major city in the country, but several reports over the past year suggest that lower-quality buildings are suffering the most. Tenants who want to be in the office are willing to pay for nicer, newer space.

Although Denver saw an office boom in the 2010s, many of the city’s largest and most iconic buildings were built in the 1980s.

Denver’s high-quality office buildings continue to outperform the overall stock, according to the latest data from CBRE. The brokerage firm’s second-quarter report shows a vacancy rate for Class A properties in the city’s downtown area of ​​23%, significantly lower than the 33% average for downtown Denver as a whole.

A higher vacancy rate means that owners of Class A properties are typically better able to manage their cash flow, making it easier for them to pay their mortgages on time.

When it comes to other sectors of the real estate market, Denver’s crime rate is either at or below the average for the 50 largest metropolitan areas, Trepp said.

Denkanikotte said the delinquency rate for mixed-use residential CMBS buildings in Denver is zero, which he found “somewhat surprising given how high the delinquency rate is for office buildings” and that many mixed-use buildings also include offices.

By meerna

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