According to a new MSCI Real Assets report, the total value of offices that were financially troubled or repossessed by lenders shot up about 36% from the first quarter.
At the end of June, $22.7 billion of retail properties — including malls — and $13.5 billion of hotels were in distress. The total for all troubled commercial properties was almost $72 billion, up 13% from the first quarter.
It’s the first time since 2018 that neither the retail nor hotel sector was the biggest contributor. The office sector was responsible for the largest share of marketwide distress.
According to the report, $24.8 billion of US office buildings were in distress at the end of the second quarter.
MSCI identified an additional $162 billion of properties in potential distress, with problems such as delinquent loan payments, high vacancies or maturing debt.
