a commercial real estate reco
Delinquencies are rising by more than 12%, yet loan originations have increased by 50%. Inside the starkly divided reality of 2026’s commercial real estate market.
What happened to the commercial real estate crisis after COVID-19? It depends on your point of view. Industry watcher Trepp says defaults on U.S. office-building loans are at an all-time high, with rates exceeding 12%.
Loan originations across the asset class increased by half year-on-year in the first quarter of 2026, according to data from the US Mortgage Bankers Association (MBA). “This is a tale of two markets, weathering the crisis but also delivering record-setting releases,” said Lonnie Hendry, Trep’s chief product officer.
The desire for amenities has replaced “location, location, location” as corporate tenants pay more for new, attractive premises. “You’ll have a building with high vacancy, and someone is starting construction next door,” said Jim Costello, co-head of real-assets research at MSCI.
B-quality spaces built or financed before 2022 are ultimately facing their value at 2026 interest and occupancy rates, Hendry said: “A $10 million building with 60% occupancy becomes a good performer if it’s sold for $3 million.”
An increasingly diverse field of lenders is mitigating the financial impacts. According to MBA, banks now account for less than 40% of commercial real estate lending; The rest is spread across a vast array of securitized instruments, institutional investors and dedicated debt funds.
MSCI’s Costello said diversified lenders are fighting for base borrowers, potentially driving down costs. “There is so much competition now that lenders may go for lower spreads.”
This article is published in the June 2026 issue Global Finance Journal.
