This week's column examines how U.S. Department of Housing and Urban Development financing is going mainstream, concerns over long-term office commitments fueled by Starbucks' plans for a second headquarters, and declining CMBS loan delinquency rates. Read the entire piece by clicking "read more" below.
HUD financing gains institutional traction: U.S. Department of Housing and Urban Development–insured multifamily financing is moving firmly into the mainstream in 2026, as faster execution, looser underwriting and a wave of proposed policy changes broaden the program's appeal beyond its traditional borrower base.
Through April, the agency has securitized $6.36 billion in multifamily and senior housing loans, according to CoStar data — a 51% increase from $4.21 billion during the same period last year.
Processing timelines have shortened and internal workflows have become more predictable, reducing the friction that long-sidelined institutional borrowers, according to analysis from real estate finance firm Walker & Dunlop.
"HUD is not a fallback option. It is increasingly the most strategic one," Ken Buchanan, executive vice president of Federal Housing Administration finance at Walker & Dunlop, said in a statement. The FHA operates within HUD.
That shift is already translating into large, high‑profile transactions. This week, Walker & Dunlop said it arranged $130 million in HUD financing for the redevelopment of a historic former Veterans Affairs hospital campus in Denver into a 493‑unit mixed‑use apartment complex.
Among the proposed changes, HUD plans to reduce vacancy assumptions to 5%, lift large‑loan constraints, streamline technical reviews and scale back certain environmental diligence requirements — moves that lower costs and increase proceeds, Walker & Dunlop said.
HUD's largest securitized loan so far this year totals $276.3 million, supporting $430 million in renovations across 1,922 units in 22 buildings that make up the Linden and Penn‑Wortman properties in Brooklyn, New York. The New York Housing Authority‑owned properties are being redeveloped by a team led by Douglaston Development, L and M Partners, Dantes Partners and SMJ Development, with work expected to wrap up by the end of 2026.
By comparison, the largest HUD securitization through April of last year totaled $70.6 million.
Perhaps the most consequential change is HUD's decision to support units priced at up to 120% of area median income, pushing the program squarely into the workforce and middle‑income housing segment — the fastest‑growing and most supply‑constrained portion of the rental market.
Broader capital market conditions are reinforcing the shift. Interest rates have moderated but remain elevated by historical standards, while private lenders continue to underwrite conservatively. In that environment, HUD's long‑term, fixed‑rate, nonrecourse financing structure — paired with high leverage and construction‑to‑completion possibilities — offers a level of certainty that banks, life insurers and even Freddie Mac and Fannie Mae often cannot match, Walker & Dunlop said.
Looking ahead, refinancing demand is expected to build as loans mature and borrowers move away from short‑term financing structures.
A venti-sized CMBS wake-up: Starbucks' decision to lease 250,000 square feet in Nashville, Tennessee, as an eastern headquarters jolted Seattle — and the commercial mortgage-backed securities market — with fresh questions about the durability of long-anchored corporate office commitments, according to Morningstar Credit.
While Starbucks stressed the move does not signal an exit from Seattle, media coverage fueled speculation about the company's longer‑term presence in its hometown. The Seattle Times quoted an unnamed executive as saying, "Everyone is just completely resigned to the idea that this company is moving to Tennessee," Morningstar noted.
Starbucks sought to tamp down that narrative in a statement to CoStar News. "Starbucks is establishing an additional support office in Nashville that will complement our global and North America headquarters in Seattle, where we will maintain a large presence," the company said. "The majority of our support teams continue to be based here in Seattle."
Starbucks remains deeply embedded in Seattle's civic and economic fabric, holding a lease through 2038 on its 2.1 million‑square‑foot headquarters at Starbucks Center, a property backed by $435 million of CMBS debt.
From a bondholder perspective, Morningstar's initial focus quickly turned to that asset, where Starbucks accounts for 94.5% of base rent under a long‑term lease with no termination or contraction options. The company has occupied the complex since 1993 and has invested nearly $366 million in the space, including roughly $266 million since 2015.
The broader concern, however, extends well beyond one property. Morningstar said the episode highlights a growing risk for CMBS investors: the accelerating migration of corporate headquarters toward lower‑tax, lower‑regulation states. Headquarters‑backed assets have long commanded a premium in CMBS underwriting, predicated on tenant stickiness and heavy build‑out costs. That assumption may now warrant closer scrutiny if Sun Belt markets continue to lure companies away from legacy coastal hubs.
A CoStar analysis of office relocations from January 2020 through 2025 underscores the uneven geography of the shift. New York emerged as the largest net gainer, absorbing 3.3 million square feet of expansions, while Sun Belt markets also posted gains, including Los Angeles, Dallas-Fort Worth and Atlanta. Chicago stood out on the losing side, logging a net decline of roughly 1.5 million square feet, though losses were broadly dispersed rather than concentrated in a single market.
Loan delinquency declines: The overall U.S. CMBS delinquency rate fell from 3.43% in March to 3.28% in April, as large office and retail loan resolutions outpaced new delinquencies and strong new issuance expanded the index, according to Fitch Ratings.
Three sizable loan workouts totaling $458 million across office and retail properties in New York, Los Angeles and Boulder, Colorado, drove much of the improvement. Resolution volume jumped from $1.41 billion in March to $2.04 billion in April, with $1.33 billion of loans brought current, $362 million liquidated and $348 million of previously 60-plus-day delinquent loans migrating back to 30-day status.
The three key resolutions highlight an active workout environment:
- A $180 million office loan on 261 Fifth Ave. in New York was brought current following a loan modification that extended its maturity through September.
- A $150 million retail loan on 29th Street in Boulder made a post-maturity debt service payment in April after defaulting at its February maturity.
- A $128 million office loan on 1000 Wilshire in Los Angeles also made a post-maturity payment after reporting as nonperforming in March.
New 60-plus-day delinquency volume fell sharply from $2.79 billion in March to $1.34 billion in April. Office loans accounted for 38% of the new delinquencies, or $507 million. That was followed by multifamily at 25%, or $335 million; retail at 22%, or $296 million; and hotel loans at 6%, or $85 million. Delinquency rates declined across most property types in April. Office property loan delinquencies led all sectors at 8.56%, down from 8.76% in March. Hotel-related distress fell from 3.69% to 3.49%, and mixed-use saw the sharpest drop, from 5.38% to 4.69%. Retail loan delinquencies ticked down from 3.77% to 3.75%, and multifamily improved from 1.31% to 1.21%.
Within retail, the delinquency rate for loans tied to regional malls fell from 6% in March to 5.21% in April. Industrial loan distress bucked the trend, rising from 0.67% to 0.78%, as did self-storage, which edged up from 0.04% to 0.06%.