CRE Lending Surges in Q1 2025 Despite Market Uncertainty

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Good morning. Commercial real estate (CRE) lending saw a significant rebound in Q1 2025, with banks leading non-agency deals amid volatile market conditions.

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Market Snapshot

Lending Activity

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• Tourism slump: NYC has slashed its 2025 tourism forecast by 3.5M visitors, with hotel and attraction revenues already feeling the impact. 

• Land ban: Texas lawmakers passed a bill restricting property sales to buyers from China, Iran, North Korea, and Russia, sparking controversy and the potential impact on Asian communities. 

• Starwood says: Starwood’s Barry Sternlicht predicts the economy will weaken due to tariffs and travel slowdowns, pushing the Fed to lower interest rates, which could revive commercial real estate activity.

• Lease loyalty: Apartment renter turnover has dropped to an unusually low 30% in major urban markets, as affordability concerns convince more tenants to stay put.

• Cautious confidence: Berkadia’s first Multifamily Investor Sentiment Survey reveals a cautiously optimistic outlook for 2025, with investors eyeing moderate growth, portfolio expansion, and Core-Plus strategies.

• Future framework: NYC has selected Artimus and Phoenix Realty Group to develop its largest mass timber residential project—500 units on Staten Island’s Stapleton waterfront.

• Student stability: Despite economic jitters and tariff pressures, the student housing sector remains steady in 2025 with solid pre-leasing and continued investor activity. 

• Lenders lean in: Banks are ramping up construction lending in Boston’s multifamily sector amid a housing shortage, even as equity investors grow cautious.

• Suburban boost: SteepRock Capital has provided $28.5M in construction financing for Fernmoor Homes' 132-unit Mi-Place at Media development near Philadelphia. 

• Cooling demand: Industrial vacancy rates are nearing their peak as new construction slows sharply, creating a more balanced supply-demand environment.

• Airport play: McCarthy Cook has acquired Tailwinds at Gateway, a $51.5M industrial park near Mesa Gateway Airport. 

• Supply bet: Bain Capital and Oliver Street Capital have acquired an 11-property, $208M infill industrial portfolio in Northern New Jersey, boosting their presence in one of the nation’s most supply-constrained markets.

• Growth gamble: Primaris REIT is doubling down on Canada’s overlooked malls, spending $1.7B since 2022 and offering pension funds an off-ramp from underperforming assets.

• Fitness footprint: EoS Fitness is expanding rapidly and capitalizing on vacancies in North Texas, signing 120 KSF in leases across Dallas, Saginaw, and Fort Worth. 

• Space shortage: Chicago retail landlords hold the upper hand as vacancy hits record lows, rents surge, and a thin construction pipeline leaves tenants scrambling for space and leverage.

• Downtown drop: Nashville’s largest office towers have shed nearly $400M in value amid soaring vacancies and distressed sales, triggering potential tax hikes.

• Trophy space: For the first time, One World Trade Center is leasing its top floors, offering unmatched views and Midtown-style pricing, as Lower Manhattan sees a resurgence in trophy office demand. 

• Anchor deal: Old Navy has signed a 55 KSF lease at Herald Towers, marking one of Manhattan’s largest retail deals this year.

• Class A upgrade: Bradford Allen has acquired the 18-story One Clearlake tower in downtown West Palm Beach, planning $10M in upgrades as it bets on Class A demand.

• Bullish bets: Global hotel brands remain optimistic about long-term growth in Latin America and the Caribbean, citing resilient local partnerships, rising middle-class demand, and creative deal structures.

📈 CHART OF THE DAY