Post-COVID landscape of distressed loans in the DC Metro area

Since the pandemic, the DC Metro area has experienced varying degrees of distressed loans across different property types. Office loans, in particular, have struggled due to persistent low demand for office space, high concessions, and unfavourable interest rates. In Suburban Maryland, about a quarter of office loans are distressed, reflecting issues such as lower quality office buildings and higher vacancy rates in suburban office parks.

Conversely, multifamily and industrial loans have performed relatively well, driven by strong consistent demand that allows landlords to keep rents at higher levels. Additionally, the DC area’s robust tourism sector helps keep distressed loans among hospitality properties relatively low compared to Suburban Maryland and Northern Virginia.