Multifamily loans also saw a slight increase in delinquencies, from 1.1% in the second quarter to 1.2% in the third quarter, reflecting continued difficulties in the rental market despite strong demand in some regions.

On the other hand, lodging, retail and industrial properties appear to be doing better. Personal loan delinquency rates fell 70 basis points to 3.8%, and industrial properties had just 0.6% of delinquent loan balances at the end of the quarter. The hospitality sector also saw improvement as travel demand continued to recover, with hotel loan delinquencies falling 30 basis points to 5.7%.

The growing gap between office and other sectors highlights the uneven recovery in commercial real estate. While office owners face falling demand, commercial and industrial spaces are performing better, driven by changing consumer habits and the growth of e-commerce.

Although rising delinquencies could be an early sign of economic strain, particularly in the office sector, the overall market remains relatively stable for now. Still, lenders could adopt more cautious strategies, tightening underwriting standards and potentially increasing interest rates on new loans as the landscape evolves.

For investors, the contrasting performance across property types highlights the need for prudent risk management, particularly when it comes to office space.