The commercial mortgage-backed securities market is on track to exceed issuance expectations in 2026, with single-asset, single-borrower deals driving the reassessment. With more than $90 billion of CMBS volume scheduled to close through early September, the market is on pace to reach nearly $140 billion by the end of the year, according to analytics firm Trepp, which initially predicted $130 billion of activity in 2026. The CMBS market has been on the rebound in the last two years, with $126.6 billion of the debt vehicle issued in 2025, up from $108 billion for 2024. Trepp’s Stephen Buschbom, head of its applied research and analytics, and Andy Boettcher, head of research, met with Commercial Observer on Aug. 20 to discuss the latest trends in the CMBS market.
The mechanics of this year’s issuance show a pronounced tilt toward SASB transactions. Of the roughly $92.6 billion in CMBS private label issuance that has been announced, 75 percent of that, or about $69 billion, has been in single-asset, single-borrower transactions. Boettcher explained that on the buyer side, whether that’s a pension fund or a bank that’s required to hold triple-A’s, SASBs enable them to build the portfolio they want. If they want to be overweighted to New York or underweighted to New York, they can do that way more efficiently in their portfolio management systems with SASB than they can through the conduit channel. That buyer incentive makes banks way more comfortable in terms of how they want to manage their risks that they’re taking with their direct exposure versus their securities exposure.
The evidence from Trepp’s researchers also points to a longer-term normalization story. Buschbom noted that distress by nature has a long tail, and that looking back at the 2008 crisis, the market didn’t reach peak delinquency until four years after AIG and Lehman Brothers. He said the paradigm shift for office is going to take a long time to play out just because of the nature of the leases, and as those leases roll and companies continue to re-evaluate their space needs, that stress will continue flowing through the market. Trepp’s earlier expectation was that by 2026 the market would hopefully see some sort of stabilization or normalization so that lenders would gain confidence and transaction volumes would begin picking up again. Buschbom said that has turned out to play out more or less as hoped. Through August, approximately $91 billion in private label CMBS issuance was scheduled to close, which would put the year at a little over $136 billion, in line with the $135 billion to $140 billion total Trepp was projecting early in the year.
The sector implications are uneven. Buschbom described investor appetite for Class A-minus or Class B office buildings as lukewarm at best, saying he has wanted to see more of a trickle-down effect for both space demand and asset owner appetite. Demand has picked up a little bit in the margins, but not in the B-plus space and more in the A-minus, the stuff that has a path forward to justify the capital needed to renovate the space and keep it operating at that very high-level A-minus space. Breaking the market into tiers 1, 2, 3 and 4, he said tier 2 maybe on the margins might be seeing a little bit of a benefit and a little bit of a lift, but tier 3 and 4 still is largely orphaned. On data centers, Buschbom said it is difficult to tease out how much of the widening and spreads has been related to sentiment and broader sector concerns versus an idiosyncratic supply wave, noting that three deals got priced in June and July in very quick succession, whereas in the past data center deals tended to be spaced out more.
The source material is limited to a single interview published by Commercial Observer on September 1, 2026, and the full text available cuts off mid-discussion of data center pricing. The dossier does not include complete quotes on bank balance sheet lending, Federal Reserve policy, or Treasury rate expectations beyond fragmentary references to a 3 percent growth figure on $3 trillion of CRE bank balance sheet loans and a normal Fed funds rate in the 3 to 5 percent range. Those fragments are not developed enough in the available text to support broader conclusions about monetary policy or bank lending conditions. What to watch is whether the SASB-heavy mix persists through the fourth quarter, whether distress continues to flow through office leases as they roll, and whether data center spread widening reflects sentiment or a genuine supply wave.