Both the Chicago Cubs and the Chicago White Sox reached the Major League Baseball playoffs in 2026. However, the owners of the city's office towers in the Commercial Mortgage-Backed Securities (CMBS) market did not experience the same success. In fact, Chicago is proving to be the weakest real estate market among this year's MLB playoff cities.
In July, the $536 million loan for Chicago's Aon Center reached maturity and was not repaid. The tower, valued at $824 million when the loan was securitised, is now appraised at only $195 million. A request for a three-year extension was
Furthermore, in August, 25.3 per cent of the outstanding CMBS volume in the Chicago metropolitan area was in default or special servicing, according to CRED iQ. This is the highest figure among the 11 baseball playoff metropolitan areas analysed and an increase of 4.7 percentage points within a year. Nationally, the CMBS distress rate in August was 10.9 per cent, a decrease from 11.5 per cent in the previous year. Preliminary September figures indicate a similar distress rate of 10.8 per cent. However, this stable national figure masks the situation in the office sector, which accounts for 45.5 per cent of the non-performing volume and whose distress rate has risen to 16 per cent. Offices are the primary source of distress in eight of the eleven playoff metropolitan areas.
Regional Distress Patterns
At the lower end of the scale, Cleveland (22.5 per cent) and Milwaukee (22.4 per cent) join Chicago. In Cleveland, $414 million of non-performing debt affects properties within a one-mile radius of the Cleveland Guardians' home stadium, led by the Key Center, which has been in special servicing since 2020. Milwaukee's distress is concentrated on the Southridge Mall, whose value has fallen by 74 per cent.
In the middle range is Philadelphia (16.3 per cent), burdened by three loans on Market Street West (1500, 1700, and 1818 Market) totalling $779 million, which account for 40 per cent of the metropolis's distress. Houston's distress (16 per cent) increased by 3.3 points when One Allen Center and Three Allen Center, a $470 million loan for a 71 per cent occupied complex, were transferred to special servicing, and six apartment loans became non-performing this summer. Los Angeles' distress rate (11.8 per cent) rose in August when the $1.1 billion ICON/Hollywood Media Portfolio loan was transferred before maturity; 20 L.A. loans totalling $2.5 billion became non-performing this summer.
Recovery Trends and Robust Markets
Positive developments are evident in New York, where the distress rate fell by 2.9 points to 9.6 per cent, as $6.1 billion in loans were remediated, including 1211 Avenue of the Americas ($1.035 billion) and One New York Plaza ($810 million). Worldwide Plaza, whose value has fallen by 74 per cent, remains the biggest problem. Atlanta's distress rate fell from 14.2 per cent to 7.5 per cent, aided by the repayment of a $580 million hotel portfolio loan.
San Diego proves to be the most resilient market in the postseason with only 0.3 per cent non-performing loans, with the Hotel del Coronado and a 98 per cent occupied Fashion Valley Mall among the largest loans. In Tampa (6 per cent distress rate), the majority of the distress is attributable to a single asset, the 27 per cent occupied Westfield Countryside Mall, which accounts for 62 per cent of the distress. Boston's distress rate of 5.6 per cent is dominated by a single life science loan that continues to be serviced.
The national rate is an average of very different markets. While Midwestern office hubs continue to deteriorate and New York recovers, in the healthiest cities, often just a few buildings determine the overall outcome. For lenders, the question is not who wins the championship, but which loans are due next. The analysis comes from Liam Mulcahy, Senior Product Manager for CRE Data and Applied AI at CRED iQ.
