Commercial properties in Denver have entered delinquency at a higher rate than the national average, with 10.5% of the metro area’s CMBS-financed buildings owing back payments on their loans, according to Trepp.

In the top 25 metro areas in the country, the delinquency rate is less than 6.2%.

Office properties make up the biggest percentage of distressed properties in metro Denver, with 29.7% of office buildings in delinquency, according to Vivek Denkanikotte, research associate at Trepp. That is the third most among the top 50 metros.

The biggest culprit is remote work, according to Thomas Taylor, a senior researcher for Trepp.

Hybrid work schedules have taken a bite out of the office market in just about every major city in the country, but several reports over the last year indicate that lower-quality buildings are the ones hurting the most. Those tenants that do want to be in an office are willing to pay for nicer, newer space.

Although Denver had an office development boom in the 2010s, many of its largest and most prominent buildings were constructed in the 1980s.

Denver’s higher-quality office buildings continue to perform better than the average across the entire inventory, according to the latest data from CBRE. The brokerage’s second-quarter office report shows a vacancy rate for Class-A downtown properties of 23%, much lower than the average 33% for all of downtown Denver.

The healthier vacancy rate means Class-A landlords are generally able to better maintain their cash flows, positioning them better to repay their mortgages on time.

Looking at other property sectors, Denver is either in line with the average delinquency rate for the top 50 metros or below them, Trepp reported.

Denkanikotte said Denver’s mixed-use CMBS delinquency rate is zero, a data point he described as “somewhat surprising considering how high its office delinquency rate is” and that many mixed-use buildings include office.