Distress in U.S. commercial real estate shifts into lower gear

Chart  •  August 20, 2025

In this chart

The outlook for distress in U.S. commercial property improved in Q2 2025, with more financial trouble resolved than added in the quarter.

Still, the market is far from out of the woods. The total value of property-related distress remained near the highest level since the aftermath of the GFC, with more than USD 100 billion of distress yet to be worked out by lenders and owners. The office segment is particularly impacted, presenting both ongoing risks and potential opportunities for well-positioned investors.

Bar chart showing the quarterly net change in U.S. commercial real estate distress from 2020 to 2024. The y-axis represents the dollar value in billions, and the x-axis represents quarterly periods. The chart displays significant fluctuations, with a sharp increase in distress in early 2020 followed by varying levels of recovery and decline in subsequent quarters. The final data point shows a slight net decline of $0.4 billion in distress. The bars are color-coded in teal and extend both above and below the baseline, indicating increases and decreases respectively.

Source: MSCI Mortgage Debt Intelligence

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