Commercial Real Estate Defaults: You Ain't Seen Nothing Yet

We proved yesterday that the internet is obsessed with commercial real estate, as everyone’s just waiting for that market to collapse.

Confirming the view that this is a big deal, this chart shows commercial real estate defaults across various indices, divided by when the mortgages were originated. Not altogether surprising.

The y-axis shows the percentage of defaults, while the x-axis represents months since origination. As the chart shows, the freshest deals, made right before the bubble popped, are reaching key default levels exponentially faster than deals done just a few years earlier. After 9 months, the CMBX5 defaults are well above the number of CMBX1 defaults after 36 months.

Who knows how high and fast CMBX5 will climb. Clearly, history is a very poor guide.

commercial real estate chart

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