Trepp’s Stephen Buschbom and Andy Boettcher On a Very Busy 2026 for CMBS

The commercial mortgage-backed securities (CMBS) market is on track to exceed issuance expectations in 2026, with single-asset, single-borrower (SASB) 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.  

This interview has been edited for length and clarity.

Commercial Observer: So far in 2026 we’ve seen strong CMBS volume coupled with rising distress. How do you view the market so far? Has any of it surprised you? 

Stephen Buschbom: The distress by nature has a long tail. If we look back at the `08 crisis we really didn’t reach peak delinquency until four years after AIG and Lehman Brothers, and it’s more or less playing out in a similar manner this time around. 

COVID was a very different mechanism and different shock, but the completely different paradigm shift for office that we live in now is going to take a long time to play out just because of the nature of the leases. As those leases roll and companies continue to re-
evaluate their space needs, that stress will continue flowing through the market. 

Our best guess back in 2022, 2023, 2024 was that we thought by 2026 we would hopefully see some sort of stabilization or normalization in the market so that lenders would gain confidence and transaction volumes would begin picking up again. That, fortunately, has turned out to play out more or less as we had kind of hoped. 

In general, from a 50,000-foot level, 2026 CMBS issuance volumes have been fantastic, but what’s been very interesting to see is that the mixture is much different than it was pre-COVID. We were already tilting heavier toward the SASB end of the market post-Global Financial Crisis (GFC), but then over the last couple of years SASB has really been the dominant origination channel. This year, of the roughly $92.6 billion in CMBS private label issuance that’s been announced, 75 percent of that, or about $69 billion, has been in single-
asset, single-borrower transactions.

What’s  driving that big disparity with SASB versus conduits?

Andy Boettcher: On the buyer side, whether that’s a pension fund or a bank that’s required to hold triple-A’s, the SASBs enable them to build the portfolio that they want. If they want to be overweighted to New York or if they want to be 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. 

There’s a buyer incentive of what kind of paper that they want to hold. It 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 SASBs enable them to be way more pointed with where they’re taking their credit risk versus a conduit channel.

During the last couple of years, CMBS SASB investors have shown increased bullishness for Class A trophy properties. How would you describe CMBS investor appetite now for Class A-minus or Class B office buildings?

Buschbom: It’s been lukewarm at best. I’ve wanted to see more of a trickle-down effect for both space demand and asset owner appetite. We haven’t seen it, really, enough in either for me to feel better about A-minus or B-plus space. The 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. 

If we were to break it down in tiers 1, 2, 3 and 4, tier 2 maybe on the margins might be seeing a little bit of benefit and a little bit of a lift, but tier 3 and 4 still is largely orphaned.

Data centers have been a huge part of the CMBS market for the last couple of years. There has been some pushback on data centers and AI in general lately. Is that showing up in some of the recent CMBS numbers? 

Buschbom: It’s difficult to tease that out and say how much of the widening and spreads has been related to sentiment and broader sector concerns versus an idiosyncratic supply wave. We saw three deals get priced in June and July in very quick succession. In the past, the data center deals tended to be spaced out more, and you would get one at most once every month, but typically it was every two to three months. 

So, to have three deals come in such a short period of time, you had subscription issues. The spread widening was notable from the market.

Andy, you previously studied credit conditions on the banking side at the Federal Reserve. What does the bank balance sheet lending climate say about CMBS now? 

Boettcher: The banks’ commercial real estate exposure reprices more frequently than the CMBS exposure does, so the distress or stress measures that get observed at the bank side come through much quicker than they do on the CMBS side. The banks have largely reserved and healed for their commercial real estate exposure specifically, so they’re going to be more guns blazing. And they have been pulling 3 percent growth, which is a really healthy number because it’s 3 percent on $3 trillion [the volume of CRE bank balance sheet loans]. 

If they are growing at 3 percent, that means all of the conduit lenders or the sponsors for the SASB deals have the same liquidity environment. There is plenty of liquidity to handle all of the CMBS maturities and rollover and whatever is happening on the CMBS side because banks are going to be the most risk-averse lender in that group. 

Given the higher-for-longer interest rate climate, do you think we will see five-year, fixed-rate, pooled CMBS loans offered by some of the big investment banks in the last few years become the new normal instead of traditional 10-year loans?

Buschbom: It doesn’t feel like we’re going to go back to 10-year anytime soon. I keep wondering if and when that shift will start going up, but the 10-year duration just has not had much of an appetite either on the borrower side or the bond buyer side. It feels like we’ll be continuing to see this five-year duration be the norm for at least another year. 

Boettcher: I’m more bearish than Stephen is on when it’s going to come back because I think it’s going to take 10 years of realizing that the Fed funds rate is not zero and that a normal Fed funds rate is in the 3 to 5 percent range and that a normal 10-Year Treasury is in the 4 to 6 range and the 30-Year is in a normal 5 to 7 range. That is where it has been for a very, very long time, prior to 2001 when we smashed the Fed funds rate way down from 9/11 and the tech burst and then post-GFC.  

I’m more in the camp of we’re talking 2030, 2031 before someone decides they have done two five-year loans and it hasn’t really changed, so they can do another 10-year loan.   

What is your projection for the remainder of 2026 with CMBS issuance?

Buschbom: As long as we don’t have any crazy spike in volatility, the trajectory will be linear. When you look historically at how issuance has trended, absent any major disruption, it tends to follow a very, very linear path and the momentum carries. Right now, through August, we have approximately $91 billion in private label CMBS issuance scheduled to close, so that’ll put us at a little over $136 billion for the year, and that seems very much in line with what we’ve been hearing from all of the major issuers. They were expecting private label issuance to be right around that $135 billion to $140 billion total they were projecting early in the year. 

I have no reason to think that we’ll fall dramatically short of that. If anything, it feels like we could break to the positive, and maybe exceed $140 billion from our annualized target right now of $136 billion.

Andrew Coen can be reached at acoen@commercialobserver.com.