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Data Center Debt Is Flooding the CMBS Market

Data Center Debt Is Flooding the CMBS Market

Data centers now account for 8% of new CRE bond deals, but investors are demanding higher yields because of the uncertainty.

Nina Dale
September 15, 2026

In partnership with

Good morning. CRE started the week with borrowing costs climbing. The 10-year Treasury yield topped 5% for the first time since 2023, as inflation and rising debt issuance pressure rates higher. Meanwhile, billions are pouring into data center bonds as Wall Street learns that underwriting megawatts is nothing like underwriting office space.

🎙️ This Week on No Cap: Basis Industrial's president explains why small bay's diversified, deeply invested tenant base makes it the safest bet in commercial real estate right now. (Thanks to our sponsor, Warespace)

CRE Trivia 🧠

Which New York building became the first commercial structure to install a passenger elevator in 1857?

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Market Snapshot

S&P 500

GSPC

7,619.98

Pct Chg:
-0.48%

FTSE NAREIT

FNER

824.79

Pct Chg:
-0.60%

10Y Treasury

TNX

5.00%

Pct Chg:
+0.025%

CME Term SOFR

1-Month

3.86%

Pct Chg:
-0.00

*Data as of 09/14/2026 market close.

Debt Centers

Data Center Debt Is Flooding the CMBS Market

AI’s infrastructure boom is pouring billions into CMBS, but investors are discovering that underwriting megawatts, cooling systems and chip cycles is a very different game from financing offices and apartments.

By the numbers: Data-center CMBS issuance has hit $17B since 2025, more than triple the prior two years. The sector now accounts for 8% of new CRE bond deals, and Citigroup forecasts $18B to $20B in issuance next year.

A new underwriting playbook: Traditional CRE fundamentals still matter, but investors must also weigh power, grid capacity, cooling and computing density. Location has a new meaning, too: access to cheap, reliable electricity can matter more than transportation, amenities, or proximity to cities.

Tenant risk gets complicated: Many deals are backed by highly specialized properties with limited tenant transparency. If a hyperscaler leaves, replacing it could require costly electrical and cooling upgrades, adding another layer of risk for investors.

Technology moves faster than real estate: Perhaps the biggest wildcard is obsolescence. New AI chips can require more power and cooling, potentially making newer facilities outdated within years rather than the decades typical of conventional real estate.

Investors want more yield: The market is pricing in that uncertainty. AAA data-center CMBS spreads average 165 basis points, according to Barclays, versus 93 for office, 105 for retail and 125 for industrial, with several recent deals pricing wider than expected.

The supply question: Big Tech has issued more than $429B in debt this year to fund the AI buildout, with more data-center financing ahead. Demand still exceeds supply, but investors are watching for financing fatigue and potential overbuilding.

➥ THE TAKEAWAY

More than real estate: Data centers may be CRE’s hottest asset class, but they’re also rewriting the rules of risk. For CMBS investors, power capacity and technological staying power could matter just as much as tenants and cash flow.

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✍️ Editor’s Picks

Get the syllabus: Train like the CRE pros at BlackRock and Carlyle in this 8-week online program from Wharton Online + Wall Street Prep. Starts Oct. 5. (sponsored)
Airbnb accelerator: Airbnb launched a $250M fund for affordable and mixed-income housing, starting with a roughly 200-unit Austin project and targeting $5B in capital over a decade.
KKR partnership: Realty Income and KKR formed a European joint venture, with KKR investing €528M for a 49% stake in a 54-property net lease portfolio across four countries.
Who’s looking at your property? RealtyAds helps CRE teams identify interested firms and decision-makers, target the right prospects, and turn digital engagement into leasing opportunities. (sponsored)
Cantor forecast: Cantor Fitzgerald is helping institutional clients enter the prediction-markets boom through its Kalshi partnership, while BGC and Newmark expand the Lutnick family’s financial empire.
Canadian capital: Canadian investors deployed $9B into U.S. real estate over the 12 months through June, shrugging off the trade war as the U.S. remains their top global destination.

🏘️ MULTIFAMILY

Migration myth: Multifamily revenue growth shows that population gains alone are unreliable, as Austin and Phoenix saw downturns after heavy construction while New York remained steadier despite outmigration.
Tampa recovery: Tampa multifamily is regaining momentum as slowing construction narrows supply, with demand outpacing deliveries and landlords poised to regain pricing power.
Multifamily optimism: Despite weak first-half performance and difficult deal execution, 82% of multifamily investors plan to expand portfolios, with the Midwest emerging as the top target.
Treasury squeeze: Rising 10-year Treasury yields are squeezing multifamily deal economics, pushing buyers to retrade or walk while distressed and supply-constrained assets still attract disciplined capital.

🏭 Industrial

Industrial rebound: U.S. industrial demand accelerated in H1 2026, with bulk occupancies up 25% to 221M SF and net absorption surging 82% to 108M SF as big-box users return.
Bulk rebound: Industrial recovery is being led by million-SF warehouses, where vacancy has fallen 196 basis points as construction pipelines shrink and demand shifts toward larger, tech-enabled facilities.
Brookfield AREP: Brookfield agreed to acquire a minority stake in AREP, pairing its global capital and infrastructure expertise with AREP’s vertically integrated data center platform to accelerate AI-driven development.

🏬 RETAIL

Mall revival: Mall values rose 13% over the past year, leading commercial property sectors as stronger consumer spending, limited supply and strategic tenant upgrades revive the struggling sector.
Dorm retail: College spending is turning dorm rooms into a major retail opportunity, with $103.5B in back-to-college purchases driving demand for furnishings, design services, AI tools and campus-adjacent fulfillment.
Traffic matters: Retail foot traffic alone can mislead performance assessments, with Walmart’s observed spend rising 14.2% in Q1 2026 despite visits growing just 3.5%, while Costco saw traffic gains but weaker baskets.
Chapman refinancing: Arc Capital Partners secured a $29.3M refinancing from Voya Investment Management for the 41,241-SF historic Chapman Market retail and dining property in L.A.’s Koreatown.

🏢 OFFICE

Ownership shift: A wave of discounted downtown San Diego office sales is bringing in new capital, fueling upgrades and repositioning while accelerating flight-to-quality and adaptive reuse.
Loan extension: Hudson Pacific Properties and Blackstone secured a 15-month extension on their $1.1B CMBS loan tied to a 2.2M-SF Hollywood portfolio, avoiding principal paydown while funding a $20M leasing reserve.
Oxford returns: Oxford Properties is reentering U.S. office with a $435M Boston acquisition, targeting Boston, New York and San Francisco while underwriting AI-driven tenant demand and development opportunities.
Ross enters: Related Ross acquired Boca Raton’s 124-acre, 1.7M-SF former IBM campus, positioning the site for a mixed-use redevelopment with housing, retail, entertainment, medical office and a hotel.

🏨 HOSPITALITY

Torch financing: Extell Development secured $1.25B in financing for The Torch, a 60-story Times Square tower featuring a 1,800-room hotel, retail, dining, observation decks and entertainment.
Hotel momentum: U.S. hotels posted a 21st consecutive week of year-over-year gains, with RevPAR up 16.1% to $100.31 as a Labor Day calendar shift boosted results.

📈 CHART OF THE DAY

The West leads CRE sales on broad strength across asset classes, while refinancing is outpacing sales nationally as looming loan maturities push more owners to refinance, or eventually sell.

CRE Trivia (Answer)🧠

The Haughwout Building on Broadway. Inventor Elisha Otis's safety elevator, which stopped automatically if the cable snapped, unlocked building heights beyond five or six stories and made the modern skyscraper possible.

Data Center Debt Is Flooding the CMBS Market

Data centers now account for 8% of new CRE bond deals, but investors are demanding higher yields because of the uncertainty.

CRE Trivia 🧠