The U.S. private-label CMBS loan distress rate entered double-digit territory in January 2026, Kroll Bond Rating Agency (KBRA) reported this month, although the pace of increase has moderated. Nonetheless, there continues to be a wide disparity in credit performance across metropolitan areas.
The distress rate across the 20 largest MSAs aggregated 10.5%, which is slightly above the national rate of 10.4%. Among the top 20 MSAs, when comparing January 2026 and January 2025, KBRA cited “a stark bifurcation in performance” as the distress rates across half of these MSAs declined, while the rate in the other half increased or remained unchanged.
The five MSAs with the highest distress rates were San Francisco (22.6%), Chicago (21.8%), Philadelphia (17.2%), Houston (13.9%), and Seattle (13.6%). Conversely, the five lowest distress-rate MSAs include San Diego (0.4%), Boston (1.7%), Las Vegas (2.2%), Phoenix (2.4%), and San Jose (3%). A total of 12 MSAs show lower distress rates than the aggregate.
By property type, office’s national distress rate was the highest (16.2%) as of January 2026. This was followed by mixed-use (13%), retail (11.5%), lodging (8.5%), multifamily (7.4%), other (2.1%) and industrial (0.9%). The MSAs exhibiting the highest distress rate within each major property type were San Francisco (lodging at 83.2%; multifamily, 49.7%; retail, 19.1%), Philadelphia (office, 34%), Houston (mixed-use, 53.2%) and Chicago (industrial, 16.3%).
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