Macro Transactions | Volume & Pricing Summary

Key Highlights

Deal Volume Surges Across the Board

Total investment activity reached $135.8 billion in Q1 2026, a 27% jump from a year earlier. Growth was broad-based across property types, with individual asset sales up 22%, portfolio deals up 32%, and entity-level transactions more than doubling. Industrial investment nearly matched the apartment sector, coming within just $1 billion of the market’s largest segment.

 

Cap Rates Rise Despite Healthy Volumes

Three of the five major property sectors saw cap rates climb year-over-year, creating tension with the otherwise strong deal activity. Office saw the largest move, up 30 basis points to 7.8%, 100 bps above its long-run average since 2015. Apartments and industrial each edged 10 bps higher, while retail was the exception, with cap rates ticking down 10 bps to 6.8%.

 

Income Assumptions Lag Reality in Office

With yield compression largely off the table, investors are scrutinizing income growth more carefully and the data reveals a concerning gap for office. Valuers are implying roughly 5% income growth for the sector, while actual NOI contracted by approximately 5% at year-end 2025. Lab and life science properties are an even sharper outlier, with an implied growth rate of 8.5% against sharply negative actual NOI, a disconnect that warrants close scrutiny.

 

CRE Distress Deepens | CMBS Hits Cycle Highs as Bankruptcy Filings Surge

The commercial real estate credit market is under intensifying pressure, with delinquency rates, special servicing activity, and bankruptcy filings all moving in an upward direction. Data released across multiple sources in recent weeks paints a consistent picture: the distress cycle that began in mid-2022 has not only persisted but accelerated, with no clear floor yet in sight.

 

CMBS Distress Reached Record Levels

The headline figure comes from CRED iQ, whose proprietary CMBS conduit loan analytics platform recorded an overall distress rate of 12.07% in March 2026. This is the highest reading since the firm began tracking performance. Delinquencies, defined as loans 30 or more days past due, in foreclosure, REO, or matured with an outstanding balloon payment, rose to 9.60%, also a cycle peak. The specially serviced rate climbed to 11.32%.

 

These numbers represent a dramatic deterioration from July 2022, when the distress rate stood at just 2.93%. The trajectory has not been linear: a brief plateau in mid-2025 had offered some cautious optimism, but that proved short-lived. By December 2025, distress had re-accelerated to 11.70%, and the March reading has now eclipsed every prior data point in CRED iQ’s dataset.

 

The gap between the delinquency rate (9.60%) and the specially serviced rate (11.32%) is itself revealing. Many loans are already inside the workout process (through modifications, maturity extensions, or forbearance agreements) without yet crossing into formal delinquency. This dynamic suggests that headline delinquency figures are likely understating the true depth of credit stress in the market. Special servicer transfer volume typically lags delinquency by one to three months, meaning the pipeline of loans moving into workout status continues to grow even as some resolutions occur.

 

The Mortgage Bankers Association’s Q1 2026 CREF Loan Performance Survey corroborates the trend. Overall commercial mortgage delinquency rates rose to 4.02% in the first quarter, up from 3.86% the prior quarter. Among capital sources, CMBS carried the highest delinquency rate at 5.21%. Office, lodging, retail, and multifamily all saw delinquency increases, with only industrial bucking the trend.

 

The data show a gradual but persistent increase in delinquency rates in the overall market,

 

said Judie Ricks, MBA’s Associate Vice President of commercial real estate research.

 

Bankruptcy Filings Signal Broader Economic Stress

The distress is not confined to real estate balance sheets. Commercial bankruptcy filings surged in April 2026, according to data from Epiq AACER and the American Bankruptcy Institute. Commercial Chapter 11 filings climbed 42% year-over-year to 644 cases, while total commercial filings rose 21% to 3,060. Small business restructurings accelerated as well, with Subchapter V elections (the streamlined Chapter 11 process for smaller enterprises) up 46% to 301 filings in April.

 

Total bankruptcy filings across all categories reached 56,427 in April, a 14% increase from the same month a year earlier. Consumer filings drove much of the volume, with Chapter 7 up 14% and Chapter 13 up 11%. Chapter 12 filings, designed for family farms and fisheries, surged 130% year-over-year, the highest monthly total since February 2020.

 

Michael Hunter, VP of Epiq AACER, attributed the consumer-side pressure to a confluence of factors: auto loan delinquencies near 15-year highs, a 26% surge in foreclosure filings in Q1 2026, rising fuel costs, and housing-related expense inflation driven by continued home appreciation pushing up property taxes and insurance.

 

These headwinds may intensify and drive even more families toward Chapter 7 and Chapter 13 protection in the coming month,

 

Hunter said. ABI Executive Director Amy Quackenboss pointed to the structural dimensions of the challenge.

 

Rising inflation, higher borrowing costs and geopolitical uncertainty are intensifying the financial strain on families and businesses,

 

she noted, calling on Congress to expand access to both Subchapter V and Chapter 13 protections on a permanent basis.

 

Capital markets feel pressure

Elevated distress is reshaping the CMBS market in real time. Conduit deal flow in early 2026 continues at a measured pace, with b-piece buyers pricing in rising loss expectations, particularly for office and retail collateral. Distressed debt buyers and special situation funds have deepened engagement with CMBS REO and note-on-note financing opportunities, drawn by the expanding supply of underwater assets.

 

The partial offsets that cushioned prior periods of stress have also narrowed. Cap rate compression in industrial and multifamily, which had provided a buffer against office headwinds in prior years, has stalled as the cost of capital remains elevated relative to in-place income yields, a dynamic consistent with the Q1 investment market data showing cap rate drift across most sectors.

 

Outlook

CRED iQ’s forward indicators suggest the overall CMBS distress rate could approach 13% by mid2026 absent a meaningful improvement in financing conditions. The key variables to watch are the pace of loan modification expirations, the trajectory of SOFR, and office property valuations, where bid-ask spreads between sellers and buyers remain wide. Until those gaps close, the weight of evidence across CMBS analytics, MBA survey data, and bankruptcy filing statistics points in one direction: distress is not yet peaking, and its reach extends well beyond commercial real estate into the broader credit economy.