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Banks Tiptoe Back Into Retail CRE Lending

Banks Tiptoe Back Into Retail CRE Lending

Open-air centers and grocery-anchored retail are proving more resilient than expected.

Nina Dale
March 13, 2026

Together with

Good morning. Retail real estate is helping bring banks back into the CRE lending market. After years of caution, lenders are gradually increasing exposure as property performance proves more resilient than expected.

Today’s issue is sponsored by Covercy—see the real deal structures sponsors are using to get cautious LPs to commit in today’s rate environment.

CRE Trivia 🧠

Which U.S. state has the most self-storage facilities?

(Answer at the bottom of the newsletter)

Market Snapshot

S&P 500

GSPC

6,672.62

Pct Chg:
-1.52%

FTSE NAREIT

FNER

800.05

Pct Chg:
-0.59%

10Y Treasury

TNX

4.263%

Pct Chg:
+0.057

SOFR

30-DAY AVERAGE

3.67%

Pct Chg:
-0.00

*Data as of 3/12/2026 market close.

Lenders Return

Banks Tiptoe Back Into Retail CRE Lending

Everette Downs | Courtesy: GBT Realty Corp

After years of pulling back, banks are cautiously returning to CRE lending, with retail properties leading the recovery.

A shift in activity: S&P Global Market Intelligence data shows 11 of the 18 U.S. banks with more than $1B in retail and shopping center loans increased balances through 2025, with a dozen posting year-over-year growth as borrower demand returned and credit surprises eased.

Fears didn’t materialize: Banks reduced CRE exposure from early 2023 to late 2025, but the widely expected distress wave never arrived, as many lenders slowed growth rather than selling and property performance held up better than predicted.

Retail’s bright spot: Retail, especially grocery-anchored centers, has been a standout performer, with open-air centers entering 2026 strong amid rising consumer spending and renewed investor interest, highlighted by GBT Realty’s $1.3B investment.

Filling the gap: As banks pulled back earlier in the cycle, private credit stepped in to fund many refinancings, redirecting capital raised for distress into direct lending and helping more properties refinance than expected.

Stronger fundamentals: Banks are also better positioned today, with tangible equity around 9%—versus 3% during the financial crisis—along with lower CRE exposure, healthier loan-to-deposit ratios, and higher reserves.

Partnering with private credit: Some banks are lending alongside private credit, taking senior positions in the capital stack so private lenders absorb losses first if deals falter.

➥ THE TAKEAWAY

Retail revives lending: Retail’s steady performance is doing what distress couldn’t—bringing banks back to the CRE lending table.

TOGETHER WITH COVERCY

How Sponsors Are Structuring Deals Right Now

Covercy powers thousands of CRE deals, so we see exactly what's closing right now.

Spoiler: traditional structures aren't it.

We put together a free guide breaking down five deal structures GPs are actually using to get choosy LPs off the fence in today's rate environment. Real platform data, not theory. Download it now.

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

✍️ Editor’s Picks

Fundraising Automation Playbook: 10 Plays to Prevent Stalled Commitments and Win More Investors in 2026. (sponsored)
Green capital: U.S. C-PACE financing surged 63% to $3.6B in 2025, driven by larger deals, broader lender acceptance, and renewed activity in markets like NYC, which accelerated adoption.
Brokerage powerplay: Savills is acquiring Eastdil Secured for $1.1B to rapidly expand its U.S. real estate capital markets business.
Simplified software: CRE technology is evolving from scattered point solutions toward single platforms that automate the entire deal process. (sponsored)
AI confidence: Oracle eased Wall Street concerns over its AI data center spending after posting strong earnings, fueled by 44% cloud revenue growth and an 84% surge in cloud infrastructure sales.
Rebound broadens: U.S. commercial real estate rebounded in 2025, with prices, deal sizes, and transaction activity all rising together for the first time since 2021.
Deadline drama: A judge gave Charles Cohen 45 days to raise $135M or Fortress can take control of a 12M SF portfolio.
Distress window: Canopy launched a distressed CRE fund, saying middle-market assets face a rare buying window at attractive valuations.

🏘️ MULTIFAMILY

Rent rut: U.S. multifamily rents held flat in February as weak demand and elevated supply continue to suppress rent growth despite stronger performance in gateway cities.
Lease-up drag: The apartment construction boom is breaking, but a 350,000-unit lease-up backlog keeps multifamily recovery slow.
Suburban squeeze: Chicago suburban apartment buyers are crowding in as rent growth stays strong and construction remains thin, intensifying competition for assets.
Peach peril: Lument has initiated foreclosure on a $23.2M loan tied to Atlanta’s 68-unit Peach apartment tower amid prior investor dispute allegations.

🏭 Industrial

Bulking up: U.S. bulk industrial occupancies jumped 25% in 2025 to 384M SF, signaling renewed demand as large tenant move-ins rebound.
Tax setback: Brazoria County denied a tax break for a proposed $3.5B data center and power plant, though the project can still proceed.
Storage institutionalization: Alterra IOS secured $103M from PGIM for a 23-asset portfolio spanning 18 markets, underscoring deeper institutional capital for IOS.
Megabox lease: DSV Contract Logistics leased more than 1M SF at Northlake 35 Logistics Park in Northlake, one of the area’s biggest recent industrial deals.

🏬 RETAIL

Brick expansion: After a record sales and profits year, Lego plans to expand its U.S. footprint beyond its 100-plus domestic stores.
Retail strongholds: Florida and Carolina metros are leading U.S. retail resilience, with low vacancies, limited new supply, and steady rent growth supporting investor demand.
Backfill rush: Bankruptcies are creating second-generation retail vacancies, but value-driven retailers are quickly filling them.

🏢 OFFICE

Migration magnet: Four companies moved their headquarters to South Florida in the first two months of 2026 as CEOs also planted personal roots there.
Absorption record: Manhattan office leasing hit a six-year high in 2025, driving a record 15.56 MSF of positive absorption.
Budget mismatch: LA office tenants want Class A space, but build-out and construction costs are straining budgets.

🏨 HOSPITALITY

LoHi launch: Century Communities has acquired a shovel-ready LoHi site and will begin a 116-unit apartment project immediately after securing entitlements and permits.
Convention recap: Peachtree originated $103M in bridge debt to recap and complete the 289-key Hilton Miami Beach Convention Center Hotel ahead of its May opening.
Hotel handoff: The sale of San Francisco’s Parc 55 and Hilton Union Square out of receivership was named transaction of the year.

📈 CHART OF THE DAY

Tariffs pulled U.S. container import demand forward in 2025, leaving volumes soft through mid-2026 with a potential rebound by early 2028.

CRE Trivia (Answer)🧠

Texas, with over 6,900 locations, significantly outpacing California and Florida.

Banks Tiptoe Back Into Retail CRE Lending

Open-air centers and grocery-anchored retail are proving more resilient than expected.