U.S. commercial real estate (CRE) refinancing activity remains robust in 2026, even as new headwinds start to draw sharper lines between property segments, according to Fitch Ratings' "U.S. Commercial Real Estate CMBS Loan Performance Monitor: 1H26."
The report notes the overall refinancing or repayment rate rose to 78% in the first quarter, up from 75% in 2025 and 68% in 2024. By property type, industrial loans (100%) and multifamily loans (96%) led, followed by hotel loans at 86%. Retail (62%) and office (59%) lagged behind.elinquency rate. The current delinquency rate is 8.6%, while the modification adjusted delinquency rate is 14.4%, which reflects loans that were not paid off at maturity and were modified and extended. The same is true for retail as well: delinquencies are about 3.8%, and with modifications, that rises to 8.1%.
"This speaks to the underlying distress tied to forbearance and maturity extensions—which allows borrowers additional time to determine their next steps for loans that are facing refinance challenges," Chughtai said.
Current challenges
Specialists in representing borrowers in loan workouts with CMBS and CLO servicers pointed out several challenges. Some B-piece buyers are often seeing new pools with comparable loans for loans they are currently working out of a distressed situation, according to Michael Cohen, a managing partner at Brighton Capital Advisors.
"In general, traditional balance sheet lenders are more selective on asset classes they lend on, resulting in an increase in better-quality loans in CMBS. The downside is that too many of the weaker-sector loans have no other outlet than CMBS pools, which have percentage limitations on asset class volumes per pool, leaving many borrowers out in the cold," Cohen said.
Private capital is available, but it comes at a high cost. When combined with balance sheet uncertainties, the lack of large, stable securitizations, and elevated interest rates, many borrowers face the prospect of cash-in refinancing, Cohen stated.
Declining net operating income—driven by inflation, rising costs, or reduced revenue—further complicates matters. Ultimately, borrowers must decide whether to inject additional capital into assets where returns may be uncertain, Cohen said.
"Our clients are strong operators with solid assets that need a loan modification and extension to make it to a calmer period of the real estate cycle to refinance or sell the asset to pay off the loan," Cohen said.
Our forecasts indicate that office delinquencies will rise, with projections reaching around 10% by year-end.
The market is clearly in the middle of a storm with strong tailwinds, Cohen said. The firm tells borrowers to speak to their current lenders about modifying and extending current loans while preparing for any negative lender action.
David Ro, a director at Fitch, said that it is not surprising that the office sector has underperformed over the past couple of years, largely due to secular changes driven by the shift to hybrid work environments and companies reviewing their corporate footprints.
"As a result, we expect ongoing challenges for the office sector throughout the coming year," Ro said. He added, "Our forecasts indicate that office delinquencies will rise, with projections reaching around 10% by year-end."
What's in store for retail
Also, the office sector, along with the secondary retail sector—particularly regional malls struggling to refinance—face considerable distress.
He explained that some of these malls received loan modifications a few years ago and are now reaching their extended maturities. They remain poorly positioned for refinancing, loan extension, or further modification.
Regional malls are a driving factor of distress within the retail sector. In contrast, anchored retail centers tend to be performing better.
"We are closely monitoring the rate of modification, which has been relatively active," said Wasiq Chughtai. a director at Fitch. "We track current delinquencies and modification-adjusted delinquencies across each property sector."
