What will happen to commercial real estate values in the second half of 2026?

Values are expected to continue stabilizing across multifamily and industrial, with modest recovery in markets where new supply pipelines have dried up. Office values will remain under pressure as structural demand trends continue. Retail values for well-located grocery-anchored product should hold or modestly improve. Hotel values are asset-specific. The consensus view among institutional research (Green Street, CBRE, JLL) is a gradual stabilization through 2026-2027 followed by a modest recovery cycle in 2028-2029, assuming no macro recession.

How much CMBS debt is currently delinquent nationally in 2026?

Total CMBS delinquency (30+ days past due) as of early 2026 was approximately $35-40 billion, representing roughly 5.5-6% of outstanding CMBS balance. Office and retail have the highest delinquency rates by sector. This compares to a cycle low of under 2% in 2021 and a GFC peak of approximately 9% in 2010-2011. The current cycle is expected to reach a delinquency peak of 7-8% in late 2026.

Which markets will see the most distressed deals in 2026?

Dallas-Fort Worth and Houston lead in multifamily distress volume. NYC and Chicago lead in office distress volume by dollar amount. Atlanta is the most active market for mid-market multifamily distress transactions by deal count. Miami and Los Angeles have elevated mixed-use and hospitality distress. These are the highest-activity markets for buyers targeting distressed acquisitions.

Is the 2026 distress cycle worse than the 2009-2012 post-GFC cycle?

By dollar volume of distress, likely comparable. By breadth (share of the market affected), probably less severe, the current distress is more concentrated in specific asset types (office, overleveraged multifamily) and specific loan vintages, whereas the GFC affected nearly all commercial real estate sectors simultaneously. For buyers in the most affected sectors, the current cycle provides comparable buying opportunities to the 2010-2012 window.

How long will the distressed buying window remain open?

Based on historical cycle analysis, the primary distressed acquisition window is 2025-2027, with the best combination of available inventory and realistic pricing. After 2027, most predict that the distressed inventory will be substantially absorbed, financing markets will normalize further, and acquisitions will increasingly shift back to stabilized value-add rather than distressed pricing. Buyers who are systematically active in 2025-2027 will capture most of the cycle returns; those who mobilize in 2028 will find a more competitive market with less discount available.

2026 Commercial Real Estate Distress Outlook

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