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CREFC's January 2026 Monthly CMBS Loan Performance Report

February 26, 2026

Key takeaways:
  
DELINQUENCY RATE JUMPS TO BEGIN THE NEW YEAR

• The overall CMBS delinquency rate rose 17 bps to 7.47%, driven by a net $1.6B increase in delinquent balances (~$5.4B newly delinquent vs. ~$3.7B in cures and payoffs). Including performing matured balloons, the effective rate is 9.14% — a 167 bp gap that better captures the refi friction defining this cycle.
• Office set an all-time delinquency high at 12.34% (+103 bps), with special servicing reaching 17.11%. Office represented ~59% of January's $2.3B in new special servicing transfers.
• Property-type bifurcation remains the story. Lodging (-105 bps to 5.56%) and industrial (-18 bps to 0.62%) improved, while multifamily (+30 bps) and retail (+12 bps) drifted modestly higher. Notably, retail special servicing declined even as delinquency rose — suggesting workouts are resolving, unlike office for which both metrics are climbing.
• Maturity defaults — not operational failures — remain the dominant driver of new distress. Many newly distressed loans are still cash-flowing but cannot refinance at today’s higher mortgage rates. This dynamic preserves borrower incentive to negotiate extensions and modifications rather than surrender keys. 

*Source: Trepp. CMBS data in this report reflect a total outstanding balance of $633.4B: 53.3% ($337.3B) conduit CMBS, 46.7% ($296.1B) single-asset/single-borrower (SASB) CMBS.

Click here to download the full report. Contact Raj Aidasani for more information on CMBS loan performance. 

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Economy, the Fed, and Rates…

February 24, 2026

Economic Data & Labor Market

• Q4 GDP missed badly at 1.4% annualized (vs. 2.8% Bloomberg estimate, 4.4% prior). The record 43-day federal shutdown subtracted roughly 1 pp from growth (BEA estimate). Final sales to domestic purchasers — ‘core GDP’ — still expanded at 2.4%. Watch: The Q1 bounce-back in government outlays should mechanically lift the headline, but consumer deceleration deserves scrutiny.
• Core PCE re-accelerated to 3.0% YoY; monthly +0.4% was the hottest since February 2025. Headline PCE hit 2.9%. The PCE is running hotter than CPI (2.4%) because cooler housing inflation weighs more heavily in CPI than PCE. January PCE (due March 13) is tracking ~3.0–3.1% core — meaning the Fed will have zero encouraging prints in hand when Warsh potentially takes the chair.
• Supreme Court strikes down IEEPA tariffs 6–3; Trump moves to replace them within hours. The ruling immediately dropped the average effective U.S. tariff rate from 16.9% to 9.1% (Yale Budget Lab). Trump responded Friday with a 10% global tariff under Section 122 of the 1974 Trade Act, then raised it to 15% — the statutory ceiling — on Saturday. Section 122 is valid for only 150 days without congressional approval. The administration also signaled new trade investigations that could produce more permanent tariffs, but that process takes months. Over $133B in collected IEEPA duties are now subject to potential refund — the Court offered no guidance on repayment.
• Tariff pain is K-shaped. JPMorgan Chase Institute found that mid-sized firms’ tariff payments tripled over the past year, surging to 316% of pre-election levels. A NY Fed study showed ~90% of tariff costs fell on U.S. businesses and consumers. Large corporates can eat costs and shift supply chains; the middle market cannot.

Federal Reserve Policy & the Warsh Nomination

• January minutes: several officials want rate hikes back on the table. Participants endorsed describing policy risks as two-sided — explicitly flagging that increases could be as likely as cuts if inflation stays elevated. The 3.50%–3.75% rate is increasingly viewed as near neutral. Markets still price ~two cuts by year-end, but the Fed’s revealed preference is to do less.
• Warsh adds four dimensions of uncertainty. Bloomberg Economics flags: (1) balance-sheet shrinkage goals but contradictory signals on rate impact; (2) disdain for data dependence with no articulated alternative; (3) a vague “Treasury-Fed accord” that could expand or constrain independence; (4) possible elimination of the dot plot and fewer public speeches, which would widen risk premiums. Bloomberg’s analysis of Warsh’s public statements shows a striking shift from hawkish (2009–2011) to substantially more dovish than the current committee.
• Warsh’s first cut may not arrive before the midterms. With core PCE at 3%, seasonal Q1 price hikes, and a housing-data quirk likely to push the April reading higher, the earliest plausible easing window is September/October — right before the November elections. That collision between the president’s demands and the committee’s data requirements will be the defining dynamic of the new Fed leadership.
• The AI-productivity case for rate cuts faces deep internal skepticism. Warsh calls AI “structurally disinflationary,” but Governor Barr countered directly this week: higher productivity growth boosts investment demand and raises the neutral rate, not lower it. Vice Chair Jefferson, Kashkari, and Daly echoed the point. The 1990s analogy has a fatal flaw: Greenspan never cut rates because of productivity — he resisted calls to hike.

Treasury Yields & Bond Markets

• Bear-flattening week; front end led the move. 2-year 3.48% (+7 bps w/w), 10-year 4.08% (+3 bps), 30-year 4.72% (+3 bps). The 10-year snapped a two-week decline but remains 21 bps below its 2026 high (4.29%, January 20) and ~52 bps below its 52-week high (4.60%, May 21).
• Term premium — not dovish re-pricing — drove the February rally…and that’s fragile. Bloomberg Economics’ decomposition shows only ~one-third of the recent 10-year decline reflected lower rate expectations; the rest was compressed term premium driven by equity jitters and risk-sentiment rotation into duration. If equity volatility reverses, long-end yields can snap back without any change in the funds-rate path.
• Fiscal dominance: Tariff revenue hole meets unsustainable deficits. The ruling eliminates ~$1.4T in projected tariff revenue (2026–2035, Tax Foundation). CBO projects federal debt rising from 100% to 120% of GDP by 2036.

Dollar, Commodities, & Market Dynamics

• Dollar slips further, but “sell America” is overdone — for now. The Bloomberg Dollar Spot Index fell 0.2% Friday; euro at $1.18. Yet Treasury data show overseas investors bought a net $1.55T of long-term U.S. assets in 2025, up from $1.18T in 2024. The deeper vulnerability is that the rest of the world is now heavily invested in U.S. assets — meaning a sustained decline in U.S. stock prices wouldn’t just hurt Americans; it would ripple through foreign balance sheets globally.
• Gold holds above $5,100; fiscal anxiety underpins. Spot gold near $5,100–$5,130 on February 21, stabilizing after January’s all-time high near $5,595. Up ~75% YoY, the bid is increasingly structural — central-bank purchasing, deficit hedging, and geopolitical risk — rather than purely speculative.

CRE Finance Market Implications

• AI capex is colliding with housing supply through the land-and-power channel. In Northern Virginia, Amazon paid $700M for land a homebuilder acquired for ~$50M. Data-center development in Loudoun/Prince William Counties from 2022–2024 was 50% greater than the prior nine years combined. Similar dynamics near Chicago (a 55-home subdivision razed for data centers), Atlanta, and Dallas (land from $20–40K/acre to $350K+). The region faces a 75,000-home shortage.
• Office CMBS delinquency hit a record 12.34% in January — highest since Trepp began tracking in 2000. Close to $25B in CMBS loans sit past maturity without resolution; over half of ~$100B maturing this year are unlikely to repay (Morningstar DBRS). Lenders have concluded the demand shock is structural (hybrid work), not cyclical. Regional banks that were aggressive CRE lenders are entering peak distress.
• The K-shaped office market: trophy expands, commodity drowns. BXP’s 343 Madison (930K SF) is nearly half-leased three years before completion. SL Green’s CFO wishes 346 Madison were ready today. The Fed’s SLOOS shows rising CRE construction loan demand for the first time in four years. But meaningful new trophy supply is 4–5 years out, setting up a shortage by 2028–2030. Below the top tier, zombie buildings drag on downtowns from Portland to Dallas.

You can download CREFC’s one-page MarketMetrics, which includes statistics covering the economy and the CRE debt capital markets, here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

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Redistricting Update

February 24, 2026

Last summer, GOP states across the country began a flurry of redistricting at the direction of President Trump to try and shore up GOP seats ahead of the 2026 midterms. 

Texas went first, passing its maps last August and netting five seats for the Republicans in the process. 

• California followed suit netting five seats for Democrats. 
• Other states that have enacted redistricted plans since then are listed below.

By the numbers: The states listed above have new maps confirmed or are on track to enact new maps prior to the 2026 midterms. If these maps hold, the net gain of all redistricting efforts will be a one seat gain for the GOP, assuming similar voting patterns.

• However, the maps for Virginia and Missouri are still pending, and the projected delegation for those states could end up falling short of legislators best hopes. 
• In Virginia, Governor Abigail Spanberger (D-VA) signed new map boundaries into law last week, that could net the Democrats up to four additional seats. However, the proposed map needs to go before voters for approval on April 21.
  • This date is being challenged by Republicans who argue the map unfairly favors Democrats and that the process is being rushed. A recent Virginia Supreme Court decision overturned a lower court judge’s action that blocked the referendum.
• In Missouri, Governor Mike Kehoe (R-MO) signed the new map into law last October, which would give the GOP another seat. Recently, a repeal referendum reached 300,000 signatures, which would subject the new map to voter approval on the 2026 ballot, and not enact it until the subsequent election if approved. 
  • It remains to be seen if this new map will remain in effect for the 2026 midterms, as the signatures for the referendum are under review.
  • Proponents of the referendum have filed a lawsuit arguing the maps should be paused now that the signature threshold has been reached and should not take effect until the referendum is voted on in the Nov. 2026 general election. These signatures must be certified by July 2026.

In addition to the states mentioned above, Florida, Maryland and New York are also considering redistricting plans. 

• If the most extreme maps in all states are enacted, New York and Maryland together could add 2 seats for the Democrats, while Florida could gain 3-5 seats for the GOP. 
• Yes, but: These maps are far from finished and face opposition from within their own state legislatures. With filing deadlines and primaries just months away, if any other states want to change their maps in time to make an impact, they will have to act quickly. 

Contact James Montfort (jmontfort@crefc.org) with any questions.

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