Commercial real estate risk has changed over the last few years. Hotel and hospitality default risk rose following the lockdown period of the pandemic, but has fallen in recent years as people return to travel and vacation. Office default risk continues to rise, as historic distortions in remote working coupled with higher interest rates are pressuring office building owners.
Multifamily rental risk is also rising, as developers struggle to adjust to a surge in demand for new apartments in 2021 that now is slowing. Developers are pulling back on new projects, with multifamily building construction starts dropping. This is especially true in areas like Boise, where a surge in building a few years ago is slowing.