What's Ahead for Commercial Real Estate and CMBS

Interesting to compare the Case-Shiller home price index to Moody's CPPI index, a monthly index reflecting prices of commercial real estate (CRE).


(Click to enlarge.)

CRE has been following the same trajectory as residential, although it kept rising while residential began to crumble. Residential is now slightly up, but it's hard to tell when CRE will follow: According to Trepp (and as reported here), delinquencies on commercial mortgage-backed securities (CMBS), overall, breached the 4% mark in August. The chart below provides a finer break-down per CMBS type.


(Delinquency rate of CMBS. Source: Trepp. IN = Industrial, LO = Lodging, MF = Multi-family, OF = Office, RT = Retail. Click on figure to enlarge.)

Even though CMBS issuance is now minuscule, they represent about $700bn of the ~$3.5tn CRE market if I remember correctly. Thus that delinquency number should be a good proxy for the broader commercial market.