CMBS Delinquencies Climb as Data Centres Eclipse Offices

European capital markets are recalibrating as data centres are set to overtake offices in CMBS issuance, a shift underscored by CMBS delinquencies reaching their highest level since 2020. The move away from traditional office collateral reflects both structural demand changes and mounting distress in legacy portfolios. In contrast, the pipeline for new office supply in the Perth CBD is drying up, with vacancy tipped to halve, suggesting that select markets may see a reprieve from oversupply even as capital flows pivot elsewhere. Industrial remains the preferred allocation, with Rockpoint expanding its platform through the acquisition of Springs Business Park in Boston and LogiPropCo adding a 1.2M-SF logistics facility to its Phoenix portfolio. Southland Industries’ lease renewal and expansion in a Texas industrial park further illustrate the sector’s resilience. Multifamily, represented by Apartment Investment and Manage (AIV) stock forecasts, continues to attract allocator attention, but the absence of headline-grabbing transactions hints at a more cautious stance. On the capital and lending front, Wealthfront’s expansion into Washington mortgages signals selective lender appetite even as broader credit metrics deteriorate. New York’s South Street Seaport sees incremental retail activity with Casa Serra’s lease at 227 Front Street, but the real action is in markets like Boston and Phoenix, where industrial assets are drawing institutional capital. The divergence between rising CMBS delinquencies and targeted sectoral investment points to a bifurcated market, with allocators scrutinizing both asset quality and geographic fundamentals.

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