Office CMBS Delinquencies Hit 12.2% in September, Topping Financial Crisis Levels, as $1.1 Billion Hollywood Studio Loan Defaults

Since Trepp's office CMBS delinquency rate first blew past Financial Crisis-era levels in January 2026, hitting 12.3%, the number has eased slightly and then re-spiked. In September it climbed back to 12.2%, according to Trepp data reported by Wolf Street's Wolf Richter, making it the second-highest reading on record and about 1.5 percentage points above the worst months of the 2008 crash.

Scotsman Guide's Ryan Kingsley, citing the same Trepp figures, put the September office number at 12.16%, up 16 basis points from August and a full percentage point above the 11.13% rate from a year earlier. The small gap between 12.2% and 12.16% reflects rounding in how different outlets reported the same Trepp dataset, not a disagreement about the trend.

The overall CMBS delinquency rate across all property types, not just office, rose to 8.02% in September, its highest level since November 2020, according to both Scotsman Guide and CRE Daily. CRE Daily reported the rate was 7.85% in August and that five large single-asset, single-borrower loans drove most of the monthly increase.

The Hollywood default driving the spike

The single biggest factor was a $1.1 billion loan that matured in August and was not paid off, according to Wolf Street. The loan, securitized in 2021, is backed by eight properties in Hollywood totaling 2.2 million square feet: five Class A office towers and three film-studio properties, all within a mile of each other.

The borrowers are Blackstone Property Partners and Hudson Pacific Properties. Netflix is the largest tenant, leasing 57.8% of the net rentable area, with one lease expiring in January 2027 and another in June 2028. 20th Century Fox is the second-largest tenant at 6.4% of the space, with its lease expiring in December 2026. Fitch Ratings, citing special servicer SitusAMC, said Fox's renewal decision depends on whether its studio productions get picked up for additional seasons.

Rather than foreclosing, the lender granted a 14-month extension through November 2027 at a below-market fixed rate of 4.435%, according to Fitch. Blackstone and Hudson Pacific had to fund a $20 million leasing reserve from outside sources, and the loan is now subject to a full cash trap, meaning all excess cash goes to that reserve until it's repaid.

CRE Daily listed four other large loans that newly went delinquent in September: a $470 million two-tower office complex in Houston, a $280 million beachfront hotel in Santa Monica, a $230.1 million office loan in Denver where a court-appointed receiver has taken over, and a $208.9 million single-tenant office loan in Silicon Valley that exhausted its extension options and moved straight to foreclosure.

A second data provider shows it's worse

Commercial Observer, citing CRED iQ, reported a separate office CMBS delinquency figure of 13.2% for August 2026, the highest reading in that firm's data since at least 2019, covering $189.6 billion of office debt. CRED iQ's special servicing rate hit 15.7%, also a record for that dataset.

CRED iQ and Trepp use different methodologies and track somewhat different loan pools, so the 13.2% and 12.2%/12.16% figures are not directly comparable, but both point the same direction. CRED iQ found that 71% of distressed office balance is tied to failed or looming refinancing rather than missed payments, and that 51% of office loans sent to special servicing over the past year were still current when transferred, a median of 11 months before maturity. Manhattan's One SoHo Square, backed by roughly $469 million in CMBS notes, transferred to special servicing in late August while current, nearly two years ahead of its 2028 maturity.

Not every property type is struggling. Industrial loans held flat at 1.14% delinquency, the lowest of any sector, though that is still almost double the 0.56% rate from a year earlier, according to Scotsman Guide, which noted industrial properties have benefited from AI-related investment even amid trade and energy disruptions. Retail actually improved, falling 62 basis points to 6.58% after three regional malls in Lakewood, California, Rochester, New York, and Providence, Rhode Island either cured their loans or paid off in full, per CRE Daily. Multifamily rose to 8.04%, up from 6.59% a year ago, and lodging climbed to 6.18%.

The broader market mood around credit and debt stayed tense as these numbers circulated. In his October 6 trading diary for TheStreet, Doug Kass noted the S&P's earnings growth this quarter is leaning almost entirely on two stocks, Micron and Nvidia, while the median stock "barely grows," and flagged concerns from strategist Peter Boockvar about how much of US, UK, French, Italian and German government debt is held by foreign investors who can no longer be counted on to keep buying. Kass's notes don't address office CMBS directly, but they describe the same kind of narrow, concentrated risk that shows up in the Hollywood loan: a handful of giant exposures propping up numbers that look fine on the surface.

The open question is what happens when the Netflix and Fox leases on the Hollywood portfolio actually come up for renewal. SitusAMC told Fitch those discussions are ongoing, but nothing is signed. If either tenant walks or shrinks its footprint, the $20 million leasing reserve and the cash trap built into the loan's extension may not be enough to keep the building's cash flow ahead of its debt payments through the new November 2027 maturity.