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CRE Lending Up 42% as Markets Show Signs of Recovery
While still trailing pre-pandemic levels, the increase signals a continued rebound across all major asset classes, especially office, senior housing, and hotels.
Jordan B.
May 15, 2025
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Good morning. Newmark's latest report shows CRE lending surged 42% in Q1, with multifamily investment sales close behind at 41%—signs of life returning to the capital markets. However, with $2T in debt maturing by 2027, that momentum may be short-lived.
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Market Snapshot
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Financing Rebound
CRE Lending Up 42% as Markets Show Signs of Recovery
CRE lending gained serious ground in Q125, with debt originations and sales volumes both posting double-digit gains.
Debt origination jumps: CRE debt originations rose 42% YoY in Q1, per Newmark’s latest Capital Markets report. While still trailing pre-pandemic levels, the increase signals a continued rebound across all major asset classes, especially office, senior housing, and hotels. Lender activity remained subdued compared to historical norms, but the more favorable interest rate environment helped boost both refinancing and new deals.
Lenders return, cautiously: Bank lending came in just 4% below 2017–2019 norms, up 56% from last year. Debt funds and insurance companies also posted solid gains, and securitizations surged despite CMBS originations remaining flat. Banks are still tightening standards, but the net level of tightening has dropped sharply—a signal that credit conditions may be stabilizing.
Investment sales tick up: Investment sales were up 18% YoY, though still 18% shy of pre-COVID levels. Office transactions dipped 16%, while multifamily soared 42%. Most trades (67%) were for assets under $100M. Institutional capital is active again, up 66% YTD with a notable 49% increase in office deals, though institutions are still net sellers in the sector.
Liquidity with limits: There’s $328B in “dry powder” available, down 13% since late 2022. Most of this capital is focused on residential and industrial assets. Cap rates are rising in line with public markets, but spreads remain tight, making deals harder to pencil out without significant NOI growth or falling debt costs.
Trouble ahead? Roughly $2T in CRE debt will mature by 2027. Alarmingly, over a third of that originated when rates hovered near zero. With the federal funds rate now at 4.33%, Newmark warns that as much as $582B of 2025–2026 maturities could be in distress.
➥ THE TAKEAWAY
Big picture: CRE lending and investment are rebounding, driven by easing credit conditions and renewed institutional interest, but the recovery remains fragile. With $2T in debt maturing by 2027, shrinking dry powder, tight cap rate spreads, and tariff-related uncertainty, market momentum could be tested in the quarters ahead.
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✍️ Editor’s Picks
Community buy-in: Soloviev Group is offering New Yorkers a chance to invest in its $11.2B Manhattan casino project, allocating up to 12% of public equity to residents and pension funds.
Rate hike: California regulators approved a 17% emergency insurance rate increase for State Farm homeowners following recent wildfires, a move officials call necessary to stabilize the company.
Distress dips: CMBS distress fell for a third straight month in April, but rising delinquencies and non-performing matured loans hint at ongoing refinancing strain.
Data demand: Despite a brief pause in national absorption, the US data center market is maintaining strong momentum into 2025, fueled by relentless AI and cloud-driven demand.
Auction twist: In a surprising twist, Post Brothers has regained control of the stalled office-to-residential conversion at 2100 M St. NW through an unexpected auction outcome.
Deal of the day: Dick's Sporting Goods is nearing a $2.3 billion deal to acquire Foot Locker at $24 per share, marking its largest acquisition and expanding its global footprint.
🏘️ MULTIFAMILY
Peaking patterns: Markets that peaked in apartment supply earlier, especially with modest growth, are now leading in rent gains, while late or high-supply markets still face rent cuts.
Wage lag: More US renters now need six-figure incomes to afford housing, with national rent affordability thresholds rising 34.5% since 2020.
Bond backing: As traditional affordable housing funds face uncertainty, developers like Waterford Co. are turning to essential function bonds to finance mixed-income projects.
Funding secured: Project for Pride in Living landed $33M to build a 60-unit affordable housing project in St. Paul, with units reserved for low-income, disabled, and homeless residents.
DFW demand: CBRE IM sold the 376-unit Class A Kinstead McKinney to Kalterra Capital Partners, marking another major transaction in DFW’s surging multifamily market.
🏭 Industrial
Florida deal: EQT Exeter acquired the fully leased, 500 KSF Legacy at Oriole Road campus in Fort Myers for $87M, as industrial vacancy rises across Southwest Florida.
Biotech build: Genentech will invest $700M in a new drug manufacturing facility near Raleigh, its first on the East Coast, creating 400 jobs and expanding its U.S. footprint.
Pet food portfolio: Gladstone Commercial bought a fully leased, 304 KSF pet food facility near Milwaukee for $63M, expanding its net-leased industrial portfolio.
🏬 RETAIL
Simon says: Simon Property Group held its full-year forecast steady despite a Q1 income drop and tariff headwinds, with executives warning of mounting pressure on retailers.
Riverfront revival: The Trump Organization has tapped Newmark to lease 70 KSF of long-vacant retail space at its Chicago tower, aiming to revive interest with flexible buildout options.
Earnings spotlight: Kimco Realty CEO Conor Flynn told CNBC’s Jim Cramer the REIT remains bullish on grocery-anchored retail, citing strong quarterly results and steady tenant demand.
Printed potential: Retail giants like Walmart and Starbucks are embracing 3D-printed construction, but experts warn the hype may outpace the tech’s real-world capabilities.
🏢 OFFICE
Sale on the table: Franklin Street Properties is exploring a possible sale of the company or its assets after a Q1 earnings miss and persistent occupancy struggles sent shares tumbling earlier this year.
Amazon-backed bet: MDY Properties has listed its fully leased, Amazon-occupied office building in Santa Clara, offering a rare test of investor appetite for long-term tech tenancy in a struggling Silicon Valley office market.
For sale: Blackstone’s EQ Office has put its 233 KSF office building at 399 Boylston Street on the market, signaling continued movement in Boston’s office sector.
Debt reset: Brookfield has revived its $2.4B CMBS refinancing for Honolulu’s Ala Moana Center after pausing it in April due to tariff-related market volatility.
🏨 HOSPITALITY
Cost-cutting: Hotel giants are lowering forecasts as demand softens, bookings shrink, and economic uncertainty disrupts travel patterns.
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📈 CHART OF THE DAY
In Q125, banks slightly tightened CRE lending standards for the first time since 3Q23, especially in construction and core commercial sectors, though multifamily standards eased. At the same time, loan demand improved for the eighth straight quarter, inching closer to positive growth.
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