Commercial real estate finance is picking up again, but not in a way that feels broad or uniform. Instead, capital is coming back in a more deliberate, almost cautious way—flowing into specific deals and structures while much of the market continues to work through older stress.
Issuance numbers are improving and investor appetite is clearly returning. Still, this is not a rising-tide moment. The recovery is taking shape unevenly, defined as much by where lenders are willing to engage as where they are still holding back.
A More Targeted Return Of Capital
Through May 15, 68 private-label CMBS deals totaling $51.82 billion had been issued, up nearly 16% from the same period last year, according to Trepp. Activity started the year on a slower note but picked up as the months progressed, driven largely by a shift in the type of deals getting done.
Single-asset, single-borrower transactions are now setting the pace. There have been 26 SASB deals totaling $19.08 billion so far this year, and that segment is now outpacing conduit issuance by roughly four-to-1. The preference is clear: lenders and investors are gravitating toward larger, more defined deals rather than broadly syndicated middle-market exposure.
That same pattern is showing up in other parts of the market. The collateralized loan obligation sector has reopened meaningfully, with $21.61 billion in issuance through mid-May, a 60% year-over-year increase. Life insurance companies are also stepping back in as buyers of CMBS bonds, particularly SASB paper, signaling a broader return of institutional capital into structured credit.
Office Continues To Drive the Narrative
The types of assets backing these deals tell their own story. Office, despite its well-documented challenges, is playing an outsized role in current issuance.
Roughly 28% of SASB deals are backed by office properties and when conduit deals are included, office is the largest property type in CMBS issuance so far this year. That may seem counterintuitive given the sector's struggles, but it reflects a market that is still willing to finance office, just on a much more selective, deal-by-deal basis.
Multifamily, meanwhile, is taking up less space in conduit deals. Its share of collateral has slipped to just under 16%, down from nearly 24% a year ago, as housing finance agencies continue to absorb a larger portion of apartment lending.
Distress Is Still There—But Contained
While new issuance is gaining momentum, legacy distress has not disappeared. CMBS delinquency volume climbed to $45.02 billion through April, representing 7.53% of the universe tracked by Trepp.
Even so, those numbers do not point to widespread deterioration. Month-to-month changes have been driven largely by a handful of large loans rather than a broad-based weakening across property types. In March, for example, increases in delinquency were heavily influenced by two large office loans. April saw another spike tied to a concentrated group of maturity-related defaults.
Office remains at the center of that stress, accounting for $19.58 billion in delinquent loans or nearly 12% of outstanding office CMBS exposure. Multifamily and industrial have also contributed to recent increases, though in both cases, the data is skewed by a limited number of large loans rather than systemic issues.
There are also signs that the system is keeping pace with the problem. According to Trepp, $9.61 billion in loans moved into special servicing through April, while $9.06 billion were resolved or worked out over the same period. That leaves only a modest net increase of about $500 million, suggesting that while distress remains elevated, it is not spiraling.
That balance—between improving liquidity and lingering caution—is shaping how market participants are approaching the rest of the year.
At Trepp's recent Connect conference in New York, lenders and investors described a market that feels more active and increasingly competitive, even as macroeconomic risks remain in the background. Spreads have tightened, underwriting standards have held firm and for now, selectivity continues to define how and where capital gets deployed.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.