Moody’s Ratings: Retail real estate scores record high nationwide

The one-year outlook for commercial real estate collateral backing commercial mortgage–backed securities remained unchanged in fourth quarter 2023, according to Moody’s Investors Service’s overall Red-Yellow-Green (RYG) score, with a score of Yellow 59.

Retail had the highest score (Green 86), followed by multifamily (Green 75), industrial (Yellow 59), hotel (Yellow 39), CBD office (Yellow 36) and suburban office (Yellow 34). The retail score remains at its highest level since the inception of the data series, bolstered by limited new supply and record-low vacancy rates fueled by post-pandemic demand.

The multifamily score ticked up three points in fourth quarter 2023, driven by higher forecast demand and slightly lower forecast supply, though the vacancy rate increased 30 basis points to 5.4 percent. The industrial composite score has declined for the seventh consecutive quarter to reach 59 as high levels of new supply persist, increasing the nationwide vacancy