December CMBS performance data underscores a market still working through structural stress. According to Trepp, the overall U.S. CMBS delinquency rate inched up to 7.30%, reflecting a modest increase even as total delinquent balances declined. Office loans, the most scrutinized sector, showed a second month of improvement, aided by loan resolutions and modifications. KBRA’s review confirms this trend, noting a meaningful drop in office delinquency, though levels remain elevated relative to pre-pandemic benchmarks.

Headline improvement in office masks a fragile credit environment. The decline in delinquent balances suggests workouts and paydowns are progressing, but rising rates signal that loan pools are shrinking faster than distress is resolving. This dynamic points to continued credit pressure, particularly as refinancing risk and valuation resets persist across legacy vintages.

Expect continued volatility in CMBS metrics through 2026 as loan maturities, interest-rate sensitivity, and asset-specific performance drive outcomes. Office performance will likely diverge by market quality and sponsorship strength, while other property types may absorb incremental stress as capital remains selective.

CMBS delinquency data shows stabilization, not recovery. Office distress is easing at the margin, but overall credit conditions remain strained. Declining delinquent balances offer cautious optimism, yet elevated rates and uneven sector performance indicate prolonged normalization rather than a swift rebound across commercial real estate debt markets.