- CMBS issuance surpassed $126B in 2025, the highest since 2007.
- Headline delinquency rates are steady, but stress lingers in office and multifamily loans.
- Lenders remain conservative but are increasingly active as rate volatility eases.
- Over $744B in CRE mortgages come due in 2026, challenging lending standards.
Mixed Signals in CMBS Markets
Globe St reports that commercial real estate markets closed 2025 with both signs of resilience and continuing distress. According to Trepp, CMBS strength drove optimism as issuance climbed above $126B—fueled mainly by trophy and Class A single-asset, single-borrower deals. Despite this, pockets of trouble persist under the surface, especially in assets outside the core segments most favored by lenders.
Delinquencies Persist Beneath Headlines
The overall CMBS delinquency rate edged down to 7.26% in November, helped by a surge of new loans inflating the balance sheet. However, delinquencies for office properties remain at elevated levels—11.68%, near an all-time high—while multifamily distress has nearly doubled over the past year to 6.98%. This dynamic suggests that the healthy look of headline delinquency rates may be masking significant underlying stress, especially as retail, multifamily, and office loans see more new delinquencies than cures. Still, the decline marks a shift from earlier in the year when delinquency had climbed for six consecutive months, signaling that lender behavior and market confidence may be beginning to recalibrate.
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Fed Rate Cuts and Lending Trends
The Federal Reserve’s rate cuts in late 2025 helped stabilize rate volatility, encouraging lenders to focus on underwriting and asset fundamentals. Trepp observes that lender standards are tight but deal flow is improving, with several conduit CMBS transactions pricing strongly. This positions the market for solid momentum heading into 2026.
What’s Next for 2026
Next year, roughly $744B in commercial mortgages come due, testing the market’s ability to work through legacy stress. Trepp leaders expect some lenders will start to accept losses on distressed assets, opening the door for more opportunistic investors and a potential shift in how lenders approach less-prized property types and locations. CMBS strength has carried the market for now, but rising stress in key sectors will demand continued attention from investors and lenders in the year ahead.
