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CRE Financing Spreads Tighten—But the Divide Persists

CRE Financing Spreads Tighten—But the Divide Persists

With Treasuries stabilizing, CRE borrowing costs could land in the mid-5% range by year-end.

Nina Dale
February 16, 2026

Together with

Good morning. As Treasury volatility stabilizes, CRE spreads are moving in the right direction. The question now: how much further can compression run, and which sectors will benefit most?

Today’s issue is sponsored by National Flood Experts—Helping investors add millions in value by reducing or eliminating flood insurance costs.

🎙️This Week on No Cap: Alex Samoylovich explains how CEDARst turned overlooked, complex development deals into a scalable institutional platform.

CRE Trivia 🧠

Which president worked as a land surveyor early in his career?

(Answer at the bottom of the newsletter)

Market Snapshot

S&P 500

GSPC

6,836.17

Pct Chg:
+.050%

FTSE NAREIT

FNER

822.30

Pct Chg:
+1.36%

10Y Treasury

TNX

4.048%

Pct Chg:
-0.054

SOFR

30-DAY AVERAGE

3.66%

Pct Chg:
-0.00

*Data as of 2/13/2026 market close.

Spread Compression

CRE Financing Spreads Tighten—But the Divide Persists

Commercial real estate borrowing costs are easing, though not every property type is benefiting equally.

By the numbers: CRED iQ data from May 2025 to February 2026 shows spreads tightening across all major property types. Multifamily leads at 152 bps over Treasuries (down 14 bps), followed by industrial at 163 bps, while retail saw the biggest gain, compressing 15 bps to 173 bps as lender demand rebounds.

Sector snapshot: Multifamily and industrial remain lender favorites, backed by steady demand and occupancy. Retail’s rebound reflects renewed confidence in strong, necessity-based assets—capital is returning, but selectively.

Office still carries a premium: Office spreads tightened from 237 bps to 223 bps, but still sit 71 bps above multifamily. High vacancies and return-to-office uncertainty keep lenders cautious, with even trophy assets like Netflix’s Los Gatos HQ pricing in line with broader office spreads.

What’s next: CRED iQ expects further modest compression through 2026, with multifamily potentially below 150 bps and industrial under 155 bps. Office’s premium may narrow but remain above 55 bps. With the 10-year Treasury at 3.85%–4.00%, top-tier CRE loans could price in the low- to mid-5% range, down from 6%+ in early 2025.

➥ THE TAKEAWAY

Capital returns: Capital is flowing back into CRE—but it’s discriminating. In today’s market, compression is real, but so is the risk divide.

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

✍️ Editor’s Picks

Sentiment check: Where is CRE headed next? Complete our 5-minute Fear & Greed survey and help benchmark investor sentiment across sectors.
Banking on flexibility: The Fed plans to ease certain remediation requirements for banks, potentially freeing up capital and compliance resources to support lending.
Legal crackdown: DC’s attorney general filed a RICO suit targeting alleged coordinated real estate misconduct, raising legal and financial exposure for operators in the district.
Data boost: CBRE posted record revenue, driven by growth in data center brokerage and services, underscoring sustained investor demand for digital infrastructure.
AI selloff: An AI-driven stock selloff erased billions from CRE equities, extending volatility to office REITs and pressuring public market valuations.
Tariff relief: Trump may scale back steel and aluminum tariffs, offering cost relief and greater pricing certainty for metal-heavy commercial real estate projects.

🏘️ MULTIFAMILY

Multifamily hotspots: LoopNet identified 10 multifamily acquisition targets based on rent growth, supply, and demand metrics, guiding capital toward higher-performing metros.
Low-rise resilience: Low-rise multifamily construction strengthened at year-end 2025 while other segments softened, indicating selective development momentum heading into 2026.
Senior surge: Senior housing transaction volume rose 30% YoY, reflecting renewed investor appetite as occupancy and operating metrics recover.
Debt rebound: Multifamily investment increased as debt markets stabilized, with improved loan availability supporting higher deal flow and pricing.

🏭 Industrial

Storage forecast: Yardi Matrix projects moderating self-storage supply growth, suggesting easing competitive pressure and potential occupancy stabilization for operators.
Clear height: Owners of 2000s-era warehouses face leasing challenges from low clear heights, pushing retrofit decisions to stay competitive with modern logistics facilities.
Industrial acquisition: A Kayne Anderson JV acquired a six-property industrial portfolio, expanding exposure to logistics assets amid sustained tenant demand.
Meta megacampus: Meta unveiled plans for a $10B data center campus near Indianapolis, reinforcing hyperscale expansion and regional infrastructure investment.

🏬 RETAIL

Retail dynamics: JLL reports stable retail fundamentals with limited new supply, supporting rent growth and investor interest in necessity-based centers.
Executive hire: CarMax hired a hotel executive to lead its turnaround, signaling operational changes that could impact store strategy and retail footprints.
Romance revenue: Trophy towers are monetizing observation decks and event spaces for weddings and proposals, creating ancillary revenue streams beyond office leases.
Site strategy: Walmart’s latest expansion emphasizes land acquisition over store additions, positioning for logistics flexibility and long-term site control.

🏢 OFFICE

Asset sales: Wells Fargo is planning additional real estate sales and workforce reductions, signaling balance sheet optimization and potential asset dispositions.
Capital infusion: RXR is investing over $700M to reposition 450 Lexington, reflecting conviction in Class A office upgrades to attract tenants.
Gateway rebound: Los Angeles CRE sales reached $4.9B amid an office rebound, indicating renewed capital deployment in a previously stalled gateway market.
Delivery wave: New office deliveries are concentrated in select Sun Belt and gateway markets, shaping near-term vacancy and leasing competition.

🏨 HOSPITALITY

Financing package: Bally’s agreed to sell its Rhode Island casino for $700M while securing $1.1B in financing, reshuffling assets and liquidity.
Brand momentum: Hyatt’s CEO said the company enters 2026 with strong brand and development momentum, signaling continued pipeline growth and fee expansion for hotel investors.

📈 CHART OF THE DAY

States hosting key midterm elections paid more than $134B in tariffs between March and November 2025—accounting for roughly two-thirds of the $199B total collected nationwide during that period.

CRE Trivia (Answer)🧠

George Washington began surveying land in Virginia as a teenager, mapping frontier acreage that helped launch his career and made him one of early America’s largest landowners.

CRE Financing Spreads Tighten—But the Divide Persists

With Treasuries stabilizing, CRE borrowing costs could land in the mid-5% range by year-end.