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US office late payments spike on New York City loan default, Fitch says
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US office late payments spike on New York City loan default, Fitch says
Oct 10, 2025 11:28 AM

(Reuters) -Delinquencies on U.S. office loans spiked in September, driven largely by the default behind a major Manhattan office building, according to a new report published on Friday by ratings agency Fitch.

The U.S. office delinquency rate spiked 42 basis points (bps) in September to 8.12% from 7.7% in August, according to Fitch's report. 

Office commercial mortgage-backed securities (CMBS) that became at least 60 days delinquent made up just over $1 billion of an overall $2.05 billion in commercial real estate (CRE) loans that were newly 60 days or more delinquent, Fitch analysts found.

The spike was driven largely by a $180 million loan backing 261 Fifth Avenue, a major Manhattan office building built in 1928 and which defaulted at maturity last month. 

Starbucks, one of the building's most popular tenants, announced late last month that it will close its store at that location and more than 450 others throughout the nation. 

The second-biggest office default last month was a $79 million loan behind CityPlace I, a skyscraper that is the tallest building in Hartford, Connecticut.

These and other office loan delinquencies have occurred alongside a 10-bp uptick last month to 3.1% in overall U.S. CMBS delinquencies of at least 60 days, the Fitch report noted.

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