The long-anticipated wave of distressed CRE assets is closer to realization, with total distressed assets coming in at $64B during Q1 2023, Bloomberg reports, citing a new report by MSCI Real Assets.

The first-quarter total represents a 10% rise from the previous quarter. Moreover, nearly $155B in CRE assets are now at risk of distress, according to the report.

Retail properties are suffering the most, with about $23B of properties housing that sector in distress as of March. Retail was in trouble even before the pandemic, which added to its miseries as shoppers took to online sources in much higher numbers.

About $18B of office properties are distressed, according to MSCI, suffering from weak demand as office workers remain at home at least a few days a week in many cases, and some industries, especially tech, cutting staff.

Anecdotal signs of troubled CRE are piling up. In New York, the office portfolio that Columbia Property Trust defaulted on earlier this year has seen its value drop by 30%, and Brookfield has been hit by financial distress at eight of its shopping mall properties, as well as offices in Los Angeles and Denver.

Even multifamily, which is in demand, isn't immune from distress.

CMBS delinquency rates for multifamily loans among major investment groups came in at 3% at the end of Q1, up from 2.9% at the end of Q4 and 2.77% in Q3, the Mortgage Bankers Association reports.

Veritas Investments, the largest multifamily landlord in San Francisco, stopped making payments on roughly one-third of its local holdings, prompting its lender to take $1B in delinquent loans to market.