Commercial real estate lending trends in 2026

Commercial real estate lending continues to evolve as capital markets shift and underwriting tightens. In 2026, staying competitive requires understanding how lenders, investors, and borrowers operate daily.

Current market activity and lending momentum

Commercial real estate lending activity is on the rise.

The CBRE Lending Momentum Index, which tracks the pace of CBRE-originated commercial loan closings in the U.S., rose 112% year-over-year in Q3 2025. This marks the highest lending activity since 2018 and indicates increased closings and broader financing options.

How commercial real estate interest rates are shaping lending dynamics

Part of what’s driving commercial real estate lending activity is interest rate stability. After peaking above 8% in 2023 and 2024, the prime rate has settled at 6.75% as of December 2025.

As a result, interest rate uncertainty has calmed, leading to more borrowing and refinancing activity. Meanwhile, an uptick in investor demand for CRE debt has helped stabilize cap rates and property values. In fact, data from H2 2025 indicates that CRE values are rising.

Rise of non-bank lending and private debt

Another reason CRE lending is on the upswing is the rise of non-bank and private debt.

Alternative lenders gaining market share

In 2025, alternative lenders, including debt funds and mortgage REITs, led non-agency loan closings with about 37% of the volume. This group was followed by banks at approximately 31%. Life companies accounted for 16% of activity, a significant drop from the 43% share in 2024.

Flexibility in deal structure and LTV models

Compared to agency debt, private loans are more flexible in how they’re structured. For example, lenders may underwrite based on the asset-level cash flow or a maximum loan-to-value (LTV) ratio, rather than the borrower’s balance sheet or credit history.

Collaborations between banks and fintechs

Some banks are starting to embrace fintech solutions to streamline the borrowing process. For example, Blooma helps lenders streamline complex lending processes with AI. Similarly, Agora helps sponsors raise investor capital faster and more easily with purpose-built software.

Technology, AI, and digital transformation in lending

It’s no secret that tech and AI are transforming the lending space. From AI aiding in underwriting loans to software disbursing funds online, the entire loan life cycle has become digital. This not only streamlines lending but also saves money through automation and self-service tools.

ESG and sustainable financing trends

Sustainable building standards like ESG are becoming increasingly important in lenders’ underwriting decisions.

ESG-linked lending and premiums

Some lenders promote sustainability by imposing green development standards on borrowers as part of the loan terms. These are called sustainability-linked loans (SLLs). However, borrowers may pay a “green premium” for the extra costs associated with sustainable building methods.

Green loans and sustainability reporting

Regulatory incentives help drive demand for green loans. For example, many property owners must report their emissions levels to the government. A green loan that rewards low emissions can help align lenders with operators.

Net-zero financing commitments

Some lenders pledge only to fund portfolios that emit net-zero carbon emissions. While this can result in higher construction and operating costs, it can also help owners and securitizers raise more capital from environmentally-focused real estate investors.

Property type–specific lending outlook

Commercial real estate lending trends vary by property type:

1. Office

While transaction activity has improved across most property types, office transactions still lag behind. Median transaction size remains nearly 24% below its historical peak, and pricing trends indicate the sector has yet to establish a stable floor.

2. Industrial

In 2025, industrial activity focused on smaller assets while large-scale development slowed. Through Q3 2025, 340 industrial facilities under 100,000 square feet broke ground, marking a 16% rise compared to the previous year. Additionally, sale prices for these smaller facilities increased by nearly 11%, surpassing those of larger facilities.

3. Multifamily

Multifamily led the CRE transaction rebound in 2025. In Q3 2025, multifamily transactions jumped 51.1% year-over-year, representing 30% of all CRE deals and 34% of single-asset sale dollars. These figures reinforce multifamily’s position as the most active sector by volume and investor demand.

4. Retail

The retail landscape showed mixed signals, with strong pricing in certain markets but not nationwide. The standout was automotive retail, which saw a 19.4% yearly increase in prices. Meanwhile, bars and restaurants experienced pressure, with quarterly drops of 2.4% and 2.8%, respectively.

5. Hospitality

Hospitality remained the weakest sector in 2025, but signs of stabilization emerged. Transaction counts were down nearly 12% year-over-year in Q3 2025, but activity rose 13.3% quarter over quarter. Pricing also improved for full-service hotels (+5.2%) and limited-service properties (+3.8%).

6. Mixed-use and other commercial property types

Mixed-use and other property types experienced steady but modest price growth in 2025. As of Q3 2025, mixed-use properties had a median price of $111 per square foot, reflecting a 14% year-over-year increase. Looking ahead to 2026, these asset types are expected to continue trading mainly on a localized basis, less affected by national trends.

Credit quality and delinquency trends

Commercial real estate financing has increased, but delinquencies are climbing in some areas. As of Q3 2025, bank and thrift-held loan delinquencies are at 1.27% and CMBS delinquencies are at 6.59%, reflecting stress in specific property types rather than sector-wide problems.

Bank charge-off rates, or the percentage of loans that banks write off as uncollectible, have stayed near historic lows, hovering around 0.3%. This reinforces the 2025 trend of banks favoring extensions and restructuring over accepting losses outright.

Regulatory and securitization developments

Here are some regulatory and securitization developments poised to impact commercial real estate lending:

Banks to continue lending without adding risk

Banks are now using helpful tools like synthetic risk transfers (SRTs) and loan participations to effectively manage their CRE exposure. Activity related to CRE-linked SRT has reached record highs in recent years. In 2026, SRTs will help banks free up capacity for more lending, even as capital requirements tighten.

Securitization is back, but more selective

CMBS issuance surged in 2025. Year-to-date volume reached $115.2 billion through November, the highest since 2007. This indicates renewed investor interest and supports continued CRE lending activity as 2026 approaches.

Regulators pushing focus, not freezing the market

Heightened regulatory oversight on CRE concentration is influencing how banks approach lending. Over 900 banks still carry CRE exposure above 300% of capital. This has resulted in lenders tightening their underwriting standards and diversifying their risk portfolios rather than pulling back altogether.

Positive commercial real estate lending trends in 2026

Fortunately, real estate lending has a lot going for it in 2026:

• Predictable borrowing costs. Interest rates have fallen, providing borrowers and lenders with a more stable path for underwriting and transactions.
• Boosts in investor confidence and demand. Investor confidence has strengthened in certain markets, causing capital to move toward assets that demonstrate durable cash flow and strong fundamentals.
• Strong refinancing demand. Following the heavy maturity wave in 2025, an estimated $936 billion in commercial mortgages will mature in 2026. This will keep lenders active while underwriting stays disciplined.
  Pervasive optimism in the CRE space. Most people (65%) surveyed by Deloitte agree that core CRE fundamentals like leasing activity and the cost of capital will improve throughout 2026. This outlook points to steady confidence, not excessive expectation.

Risks for lenders and borrowers

Of course, commercial real estate lending and borrowing come with risks. Here are the top risks to watch in 2026:

Risk factor	Description
Economic uncertainty and policy volatility	Economic policy remains difficult to predict. While sharp rate hikes have subsided, ongoing uncertainty around future policy and interest rates continues to complicate underwriting and long-term planning.
Rising delinquencies and loan performance concerns	Loan performance is uneven across the CRE market. Mortgage delinquencies rose to 3.99% in Q3 2025, a 6-basis-point increase from Q2 and a 7-bp jump from Q3 2024. In this environment, lenders and borrowers must exercise caution in underwriting and due diligence.
Office market distress and long-term occupancy risks	Remote and hybrid work are here to stay. This has dampened demand for offices and lowered their occupancy rates, raising the risk of loan defaults by real estate owners.
Structural shifts in work models affecting property demand	Downsizing and flex space trends are now long-term drivers of tenant demand, attracting tenants seeking adaptable, amenity-rich properties over traditional office space.
Reduced risk appetite from traditional lenders	Conventional banks remain active in CRE lending but are increasingly selective, with tighter underwriting standards and stronger sponsorship requirements.
Potential regulatory tightening and capital requirements	Ever since the 2008 financial crisis, regulators have tightened bank lending requirements, making it harder to qualify for CRE loans.
Market concentration in certain markets and asset classes	In 2026, Sun Belt markets, port-adjacent markets, and secondary markets in the Southeast and Midwest will continue to attract investment. However, overconcentration in any single market or asset class could lead to significant loss in the event of a downturn.
Debt maturity walls and refinancing gaps	Large volumes of maturing debt continue to pressure borrowers. Refinancing gaps remain a risk for real estate owners facing lower valuations and higher debt-service requirements.

Best practices in lending strategies

To optimize debt performance, follow these lending best practices:

• Leverage data-driven underwriting with AI/analytics. This helps you better assess risk based on real-time market trends and borrower behavior.
• Prioritize tech and automation. They can streamline tasks like document processing, credit evaluation, and loan servicing. That way, you can save time and minimize human errors.
• Adopt ESG standards and reporting systems. Integrating ESG criteria and reporting into lending decisions aligns you with evolving investor priorities and regulatory expectations.
• Implement flexible term structuring and refinancing playbooks. Creating flexible loan structures, such as interest-only periods and extension options, helps mitigate borrower risk during market shifts.
• Partner with fintech for operational efficiency. Collaborating with fintech platforms can help you digitize workflows, improve borrower onboarding, access real-time performance data, and ultimately scale your financing operations.

Conclusion

In 2026, commercial real estate lending has evolved beyond the rebound stage and entered a more disciplined period. While capital is still accessible, it’s more selective. Achieving success now depends on embracing new underwriting standards, understanding evolving capital structures, and skillfully using risk-sharing tools.

As you focus on leveraging commercial real estate debt, don’t forget to optimize how you raise equity funds, too. With a robust investment management platform, you can streamline capital raising to shorten funding periods and improve investor relations.