CMBS lending continues to provide an important source of liquidity in today’s market. There are around 35 CMBS lenders, and they are all fighting over the same pool of mortgages. The CMBS market is rate-driven, therefore if treasuries move in, issuance comes back. The SASB market will be a great option for larger loans — typically over $500M. Do not expect underwriting to loosen anytime soon. Underwriting is much more granular, watch for real stress testing, not surface-level numbers. B-piece buyers are driving structure and killing weaker deals. Strong assets will grab capital, while anything riskier will have a tougher time. Keep an eye out for lower leverage and higher debt yields. Sponsor quality matters more than ever and lenders will be looking at track record, liquidity and downside planning.
Argentic predicts $135B in originations (U.S. and non-U.S. – includes SASB), while Benefit Street Partners’ expectation is that 2026 volumes will exceed 2025 volumes by 10%+. Deutsche Bank predicts $115B overall for U.S. CMBS this year, while Goldman Sachs points to $125B+. Natixis believes 2026 volumes to generally be in line with 2025.
Also watch for Wells Fargo, Barclays, Citi, Morgan Stanley, JP Morgan, BofA, BMO Capital Markets, Ladder Capital, KeyBank, Basis Investment Group and Societe Generale to be active. Nomura recently re-entered the space and will be focused on SASB deals. More private companies could also step in, as well as Capital One returning to CMBS.
Borrowers will see 65% to 70% leverage. Office and riskier deals will see 45% to 60% leverage. Rates will be in the upper 5% to 6.5% for strong deals, with many landing closer to 7% depending on risk. Rates should stay relatively stable from where they are currently, after the recent increase due to geopolitical volatility. The daily/weekly volatility and unpredictability of geopolitical events have added some uncertainty in pricing versus last year. DSC will start at 1.25x to 1.40x. Multifamily will see 8% to 9% debt yield, with a few deals grabbing sub-8% selectively. Retail will see 9.5% to 10% debt yield, while office will need 10.5% to 11%+. The average hotel deal will need 11% to 12%+ debt yield.
The Fed has kept rates unchanged, and signs are pointing to possibly no rate cuts this year. The landscape shifted further since the recent war with Iran, which sent the 10-year Treasury yield surging by approximately 30 basis points. This move reflects growing inflation concerns, largely driven by rising oil prices as reduced output from the Middle East puts upward pressure on energy costs. February saw robust issuance, totaling almost $13B. In February, credit spreads reached their tightest levels, setting a new benchmark for five-year conduit pools. Demand has softened over the past month. However, the CMBS market remains open, with sponsors more cautious to bring new deals to market given the sell-off in rates and spreads due to heightened geopolitical tensions and resultant macro volatility. As long as the 10-year treasury stays in the 4% ballpark, CMBS will be very strong, as almost all properties will qualify for 10-year mortgages under 6.5% or much lower rates with interest rate buydowns.
CMBS lenders will be sizing up the loans to pay off old mortgages, where rents stopped rising since COVID. They will underwrite reserves for tenant improvements and leasing commissions in the net cash flow. This lowers the loan amounts but keeps the new loans in a much better position. Office underwriting is becoming slightly more relaxed. Lenders will dip under 11% debt yield for nicer properties and office will likely trend towards less than 20% of a particular pool and pricing should improve over time. CMBS lenders will do real diligence on rent rolls and tenant credit. CapEx and reserves are real numbers now, not placeholders.
Expect CMBS lenders to seek properties with predictable cash flow. Multifamily continues to represent a larger share of CMBS pools, although less so to start 2026. Almost all multifamily loans are going to the agencies or staying with local banks. Despite increased concerns around delinquency in existing multifamily loans, underwriting has become more pointed, and investors are increasingly focused on the asset class given its growing concentration in CMBS securitizations. Watch for CMBS lenders to fight hard to get some apartments on their books. They will also target MHC, limited-service hotels and small-bay industrial this year. Self storage and anchored retail will also see aggressive terms.
Data centers are becoming more acceptable/gaining momentum and targeted more frequently. Full-service luxury hotels are better suited for SASB execution.
Office will be the toughest to finance due to demand and falling rents, and huge capital requirements to upgrade buildings. These deals continue to require well-capitalized sponsorship, often with cash going in, conservative leasing structure, and a manageable rollover profile. Senior housing will also be tougher due to the business side of the operations and the significant swings in demand due to relocation of the older population and the mortality rate of residents. Weak retail centers or anything with leasing risk or unclear demand will not be sought after.
Logistics and multifamily deals in Sun Belt growth markets will see plenty of capital. All markets are open with a strong credit story. San Francisco office buildings are turning the corner as there are positive signs with all the tech companies returning. Weaker markets that had historically been illiquid such as Los Angeles and Washington, D.C., have seen some securitization activity albeit at more conservative leverage/structure. These deals will require well-capitalized sponsorship, often with cash going in, conservative leasing structure and a manageable rollover profile. Secondary office markets, weak CBDs and volatile hotel cities will be tougher to finance. Supply has become a real issue, and underwriting market rents will be challenging, especially in select Sun Belt cities.
CMBS lenders want to see proven execution in the specific asset type. They will seek real liquidity and meaningful equity, as well as a business plan that holds up under pressure. Borrowers need to have 100% of the loan amount and 10% liquidity, until deals exceed $25M.
