Lessors of Nonresidential Buildings NAICS 531120

Feb 17, 2026 - Lenders Call in Distressed Commercial Real Estate Debt

• Lenders are increasingly forcing the issue on troubled commercial real estate debt as higher interest rates make refinancing difficult, according to The Wall Street Journal. Office distress is leading the downturn, with the commercial mortgage-backed securities (CMBS) office delinquency rate hitting a record 12.34% in January, according to commercial real estate data firm Trepp. In a January report, Morningstar DBRS noted that less than half of the $100 billion in CMBS loans maturing this year are unlikely to pay off at maturity. Declining values, weak cash flows, and structural shifts in workplace demand are driving more loans toward foreclosure or liquidation. Trepp reports nearly $25 billion in CMBS loans now past maturity, the highest level in a decade. Heavily indebted borrowers are increasingly opting to walk away from properties.
• US office leasing reached a post-pandemic high in Q4 2025 as return-to-office momentum, federal attendance shifts, and large corporate commitments boosted activity, according to a JLL report and Facilities Dive. About 97% of Fortune 100 employees now follow hybrid or in-office requirements, helping large transactions rise about 15% year over year. Total annual leasing volume rose 5.2% to 207 million square feet. Office construction has fallen 20% below historic lows, helping to tighten supply somewhat, although vacancies remain high at 22.2%. New York, the San Francisco Peninsula, Silicon Valley, and Phoenix led occupancy gains year over year in the fourth quarter. Premium rents are rising in high-end buildings as overall asking rents stagnate. JLL expects 2026 momentum to remain positive amid limited downsizing and record-low development.

• Older warehouses built before 2010 are losing tenants as modern logistics operations demand higher ceilings, stronger power capacity, and greater automation, prompting some owners to raise roofs to stay competitive, according to Bisnow. CoStar data shows pre-2010 buildings of 100,000 square feet or more lost 96 million square feet of occupancy in 2023, 131 million in 2024, and another 98 million in 2025. Properties built between 2000 and 2009 lost 86 million square feet of occupancy over the last three years. Ceiling heights that once averaged 30 to 32 feet now reach 36 to 40 feet, driving demand for roof raising projects that can cost $1.5 million to $3 million for a 50,000 square foot building. Firms that specialize in roof-raising report rapid growth as owners upgrade ceilings and power systems, although not all older assets justify the investment.
• A predicted surge of mergers and acquisitions in 2026 is poised to reshape nonresidential real estate as newly combined companies race to consolidate footprints, merge headquarters, and dispose of excess space, according to Bisnow. Owners of office, retail, and logistics properties face both risk and opportunity as megadeals accelerate under lighter regulation, abundant private equity capital, and tax-driven corporate liquidity. Brokers say rightsizing decisions must be completed within 18 months of a merger, creating rapid cycles of leasing, sales, and repositioning that directly affect asset values. AI is expected to intensify post-merger space consolidation, though its impact on total square footage remains uncertain. Rising occupancy, along with higher construction costs, is pushing firms to optimize existing space rather than build new. For landlords, the M&A boom could drive heightened turnover, shifting demand, and increased reliance on advisory services.