Office financing in 2026: who is lending, and what actually gets financed.

Office financing in 2026 is available, but only for some buildings. Banks, credit unions and SBA programs are lending on small, well-leased, medical and owner-occupied office, while debt funds write bridge loans for buildings in lease-up, and large commodity towers with heavy rollover are struggling to refinance at all. Office originations rose 47% year over year in the second quarter, according to the Mortgage Bankers Association, even as the office CMBS delinquency rate reached 12.16% in September. Lenders have stopped asking whether a building is office. They ask what kind of office it is, who the tenants are, and when the leases end.

Where the office market stands, with dates

• Office credit. Trepp's CMBS office delinquency rate was 12.16% in September 2026, up 16 basis points from August and 103 basis points from a year earlier. The overall rate rose 17 basis points from 7.85% in August.
• National vacancy. CBRE put U.S. office vacancy at 18.3% in the second quarter, down 30 basis points, its largest quarterly drop since 2015. Net absorption was 12.6 million square feet, the ninth straight positive quarter. Vacancy in prime buildings fell to 12.3%. Other providers measure differently and report rates from about 14% to 21%, but the direction is the same.
• Los Angeles. Greater Los Angeles moved the other way. CBRE reported total vacancy of 25.8% in the second quarter, up 150 basis points from a year earlier, with 432,000 square feet of negative absorption. Downtown was at 35.3%, West Los Angeles at 23.0% and the San Fernando Valley at 20.9%.
• Who is in the building. Kastle's 10-city Back to Work Barometer averaged 54.7% of its February 2020 baseline in the week that included September 22. Los Angeles averaged 47.5%.
• Medical office. CBRE's midyear review put medical outpatient vacancy at 9.8%, about half the overall office rate.
• Rates. The 10-year Treasury was 5.31% on October 5, its highest since 2002. SOFR was 3.89%, and the Federal Reserve raised its target range to 3.75% to 4.00% on September 16.

One asset class, two credit markets

The delinquency number and the lending number describe different buildings. The distress sits mostly in large loans written when money was cheap. Trepp counts $12.1 billion of performing office loans whose cash flow no longer covers debt service, with an average loan size of $74.7 million. Of that, $2.0 billion reaches final maturity in 2026 and $2.1 billion in 2027, with no extension options left.

The lending growth is in the other kind of office. Through early August, $18.3 billion of private-label office CMBS was issued, 85% of it single-asset deals, largely on trophy buildings. The conduit side went the other direction: 61% of conduit office balance was suburban, at a median debt yield of 15.6%. That is about $6.40 of loan for every dollar of net operating income. Lenders will finance ordinary office, but only at leverage that assumes some of the income could leave.

Medical office is the clearest case of a building type that still finances on its own terms. According to a CommercialCafe analysis reported in August, 67% of medical office properties that traded between 2024 and 2026 had appreciated, against 52% of general office properties.

Who lends on which office building

Banks and credit unions: small, well-leased, granular. This is where most owners of smaller office buildings should start. Bank originations across all property types rose 61% year over year in the second quarter. Our $2.7MM office refinance on Ventura Boulevard in Tarzana closed with a bank in September 2025 at 5.70% fixed, 65% loan-to-value and 1.25x coverage. The 10-year ran between 4.01% and 4.28% that month. It is now more than a point higher. Hold the lender's spread constant and the same loan would price between about 6.7% and 7.0% today. That is arithmetic, not a quote, but it is a fair starting expectation.

SBA 504: owner-users. If your business occupies at least 51% of an existing building (60% for new construction), the SBA 504 program changes the math. A bank takes a first lien for the balance, typically about half of the project. A Certified Development Company's debenture covers up to 40% on a second lien. The owner contributes at least 10%. The 504 loan is capped at $5 million per borrower, or $5.5 million per project for small manufacturers and qualifying energy projects, with 10, 20 and 25 year terms. Since July 4, 2026, eligible borrowers who take a 7(a) loan first can add up to $5 million of 504 financing, for up to $10 million combined. One caution: the debenture rate is set over the 10-year Treasury, so this year's run-up flows straight through.

Debt funds: lease-up, repositioning and maturity bridges. When in-place income will not support the loan that has to be repaid, a bridge sized to the stabilized building is the tool. These loans float over SOFR and are usually interest-only with future funding for leasing costs. Our retail and office bridge at 8560 Wilshire closed in two weeks in March 2026. More on structure is on our bridge loans page.

CMBS: stabilized and larger. Conduit lenders are active on stabilized suburban office at conservative debt yields, and single-asset CMBS is reserved for trophy towers.

Conversions. Los Angeles made its Adaptive Reuse Ordinance citywide on February 1, 2026, for buildings at least 15 years old, letting most applicants go straight to the Department of Building and Safety for permits. About 4,300 Los Angeles units were in office conversion at the start of the year, against roughly 90,300 nationally, according to a Bisnow report on RentCafe data. A conversion is financed as a residential construction loan with a new business plan, not as an office refinance, and it usually starts with a basis reset.

How lenders underwrite office now

The lease expiration schedule comes first. Expect a lender to map every lease ending inside the loan term and assume some tenants leave. In a December 2025 review of 40 large-sponsor loans, the most common office major-lease threshold was 25% of rentable area or one full floor, and a single tenant at that size can drive the whole structure.

TI/LC reserves are sized, not waived. Lenders want a projection of tenant improvements and leasing commissions for every vacant suite and every expected renewal, and they want it funded, either up front, from cash flow or as future funding inside a bridge.

Cash management springs on triggers. A drop in debt yield or a major tenant going dark can sweep excess cash into a lender-controlled account. In the same review, debt yield triggers across all property types ranged from 6% to 11%. Read these triggers as closely as the rate.

Leverage is lower and coverage binds. Bank leverage on good office runs about 60% to 65% of value in the quotes we see, and on in-place income 1.25x coverage usually decides the loan before value does.

A lease-up bridge, sized

Take an illustrative 48,000 square foot suburban office building, 70% leased, with $850,000 of in-place net operating income and a $9.0MM loan maturing next spring. At about 90% leased, the owner projects $1.25MM of net operating income.

The bank test on in-place income. At an assumed 7.00% permanent rate, 25-year amortization and 1.25x coverage, $850,000 supports about $8.0MM. That leaves a $1.0MM gap before closing costs, which is why this owner is talking to bridge lenders.

The bridge test on the exit. At $1.25MM of stabilized income and 1.30x coverage, a takeout at 7.00% supports about $11.3MM. A careful bridge lender stresses the takeout rate, say to 8.00%, which cuts it to about $10.4MM. That stressed figure is the ceiling on the bridge.

The commitment. $9.0MM to repay the maturing loan, plus a $650,000 TI/LC reserve (10,000 square feet at an assumed $65 a foot), plus a $300,000 interest reserve, is $9.95MM. It fits under the $10.4MM ceiling with about $430,000 of room, and the stabilized debt yield would be about 12.6%. At an illustrative 8.50% rate, interest on the $9.0MM funded at closing is $765,000, covered 1.11 times by in-place income. Thin, which is why the interest reserve is in the loan.

What breaks it. If leasing lands at $1.15MM of income instead of $1.25MM, the stressed exit falls to about $9.55MM, and the owner writes a check of roughly $400,000 to close. Run this before you call a lender. It tells you whether you need a bridge, a paydown or a partner.

What owners with a 2026 or 2027 maturity should do

• Start twelve months out. In our experience, office takes longer to place than any other property type. Our maturity playbook sets out the sequence.
• Build the lease schedule lenders will build. Every expiration through the new loan's term, with your renewal probability and the TI/LC each one will cost.
• Size both tests yourself. In-place coverage at today's fixed rates, and the stabilized exit at a stressed rate. The gap between them tells you which lender to call.
• Sign renewals before you apply. A signed extension with a major tenant is worth more to a credit committee than any projection.
• Check owner-user eligibility. If your company occupies most of the building, SBA 504 may beat every conventional quote on leverage.

Quick answers

Can you still get a loan on an office building in 2026? Yes, if the building has verifiable coverage, staggered leases and tenants who need to be there. Banks and credit unions lead for small well-leased buildings, SBA 504 for owner-users, debt funds for lease-up and CMBS for larger stabilized assets.

How much leverage can office get? In the quotes we see, about 60% to 65% of value from banks on well-leased buildings, usually limited first by 1.25x coverage. Owner-users can finance up to 90% of project cost through SBA 504.

How can an office owner use bridge financing for a maturity during a lease-up? Repay the maturing loan with a bridge sized to the stabilized building, with TI/LC and interest reserves funded inside it, then refinance once leases are signed. The bridge only works if the stabilized income supports a permanent loan at a stressed rate.

Is medical office easier to finance? Generally, yes. Midyear medical outpatient vacancy was 9.8%, and lenders treat build-out heavy, longer leases as durable income.

If you own office with a maturity, a vacancy or an acquisition ahead, send us the rent roll and the numbers. We will tell you within two business days which capital fits the building and what it will take. More on our approach is on the office financing page.

Sources. Office originations: Mortgage Bankers Association, August 6, 2026. CMBS delinquency: Trepp via Yield PRO, October 4, 2026, and Multi-Housing News, September 28, 2026. National vacancy: CBRE Q2 2026 U.S. Office Figures, July 29, 2026; other measures: CoStar via Bisnow, April 29, 2026 (Moody's 21% for Q1), and CoStar, August 7, 2026. Los Angeles: CBRE Los Angeles Office Figures Q2 2026. Occupancy: Kastle Back to Work Barometer, week of September 22, 2026. Medical office vacancy: CBRE Midyear Review 2026, July 31, 2026; medical office sales: CommercialCafe via CRE Daily, August 21, 2026. Office CMBS maturities: Trepp via CRE Daily, September 1, 2026. Office CMBS issuance: Trepp via CRE Daily, September 7, 2026. SBA 504: SBA, updated August 28, 2026; 13 CFR 120.801 and 120.931 and 13 CFR 120.131, eCFR current as of October 6, 2026; SBA release, May 18, 2026. Lease and cash management terms: O'Melveny, December 30, 2025. Adaptive reuse: Los Angeles City Planning, February 9, 2026; conversion pipeline: RentCafe via Bisnow, March 26, 2026. Treasury yields: U.S. Treasury, September 2025; Federal Reserve H.15 and FRED DGS10, October 5, 2026. SOFR: FRED SOFR, October 5, 2026. Fed decision: Federal Reserve, September 16, 2026. The loan sizing example is illustrative.

Rates and terms referenced are drawn from public market data, transactions arranged by Piccard Financial and recent lender quotes, reflect conditions on the dates shown, and change with the market. Nothing here is an offer or a commitment to lend. Piccard Financial is a capital markets advisory firm, not a lender.