Commercial real estate distress is extending beyond office properties, though office remains the most significantly troubled sector, according to recent data from the Mortgage Bankers Association (MBA). The MBA’s findings indicate that while stress is most acute where fundamentals are weakest, strains are spreading to retail, hospitality, and even some multifamily portfolios as higher interest rates and refinancing challenges take hold.
Approximately 24 percent of office property loans were scheduled to mature in 2025, a larger proportion than for most other property types, making refinancing at current interest rates difficult for many owners. MBA delinquency data reveal a mixed performance in commercial mortgage markets, with capitalization and repayment risks varying by lender type and property class. Delinquencies in commercial mortgage-backed securities (CMBS) have increased, reflecting challenges in securitized debt markets tied to weaker property fundamentals.
The MBA, in a statement released February 11, 2026, noted a decrease in mortgage applications in its latest weekly survey, signaling broader challenges in the real estate finance sector. Bob Broeksmit, MBA President and CEO, also addressed homeownership and the secondary mortgage market before the House Financial Services Subcommittee on Housing and Insurance on February 11, 2026, highlighting concerns about market conditions.
While office properties are experiencing difficulties due to shifts in workplace demand, impacting cash flows and valuations, rising maturities, slower rent growth, and widening bid-ask spreads are beginning to affect other sectors as well. Here’s leading traditional lenders and investors to view distress as a broader financing issue, rather than solely an office-specific problem.
The Mortgage Bankers Association is scheduled to host its 42nd Annual Regional Conference of MBAs in Atlantic City, New Jersey, from March 22-24, 2026, providing a forum for industry professionals to connect and discuss these challenges. The association’s larger Annual Convention & Expo is planned for October 11-14, 2026, at the Hyatt Regency Chicago, bringing together real estate finance professionals to address evolving market and regulatory landscapes.
Capital markets may begin to price risk more uniformly unless transaction and performance data improve, suggesting a potential shift in investor sentiment and lending practices. The MBA’s annual gathering in Chicago will likely serve as a key venue for assessing these trends.
