CRE Lending Momentum Hits Highest Level Since 2018

As borrowing costs stabilized in the third quarter of 2025, borrowers were eager to borrow and lenders accommodated them, according to CBRE, resulting in lending momentum at its highest level since 2018. Another factor in higher lending volume was tighter spreads, which helped bridge pricing gaps between buyers and sellers, thus spurring deal activity.

The CBRE Lending Momentum Index, which tracks commercial loan closings by the company in the U.S., increased by 0.55 points year-over-year, coming in at 1.04 by the end of the third quarter, a level not seen since 2018, about two years before the pandemic. Recent growth was driven by a 36 percent increase in permanent loan financing compared with the third quarter of 2024.

The index takes into account variables such as loan size, type and borrower profile, to provide a view of lending trends. Higher readings for the index indicate stronger lending momentum and a greater appetite for risk among lenders.

---

READ ALSO: 4 Key Trends in a Borrower’s Market

---

Commercial mortgage loan spreads widened slightly to an average of 197 basis points during the third quarter, up 14 basis points year-over-year, CBRE reported. These figures are based on fixed-rate, seven-to-10-year loans with 55 percent to 65 percent loan-to-value ratios. 

Multifamily loan spreads tightened by 27 basis points compared with a year ago, to 141 basis points. CBRE noted that the tightening reflects more competitive agency loan pricing.

Alt lenders, banks eager to lend

Alternative lenders and banks were especially committed to the commercial real estate lending game in the third quarter of 2025. The alt sector includes debt funds and mortgage REITs, which all together captured a 37 percent share of CBRE’s non-agency loan closings from July to September, up from 34 percent a year earlier. Debt funds’ lending volumes increased 68 percent year-over-year, driving much of the gain for the sector.

Banks came in second, providing the next-largest share of non-agency loan closings in the third quarter, with 31 percent of the action. That is a marked increase from 18 percent a year ago, CBRE reported. CMBS lending also mushroomed, with their share rising from 5 percent a year ago to 17 percent in the third quarter, spurred by a fivefold increase in lending volume.

Life companies’ interest in commercial real estate lending has been slacking off lately, however, CBRE noted. A year ago, 43 percent of non-agency loan volume was through life companies; in the third quarter of 2025, life companies accounted for only 16 percent.

Multifamily, industrial still lending volume kings

Among property types, multifamily still leads the pack in the third-quarter investment volume, CBRE reported, up 10 percent year-over-year to $42 billion. Industrial ranked second, at $24 billion, edging down by 2 percent year-over-year.

The market is seeing a broad recovery in lending, James Millon, co-head of Capital Markets, U.S. & Canada at CBRE, said in a statement.

The relatively beleaguered office and retail sectors had the strongest growth in percentage terms, with office investment volume rising 35 percent since last year to $19 billion in the third quarter of 2025, while retail investment grew by 29 percent to $16 billion. Data center investment rose by 256 percent year-over-year to $1.5 billion, but that was mainly because of a single $1.2 billion transaction, CBRE noted.

For the trailing four quarters ending in the third quarter of 2025, New York City was still the commercial real estate investment magnet, tallying up the most investment among U.S. metros at $43 billion, followed by Los Angeles with $33 billion and Dallas with $24 billion, according to the report.

Of the top 20 markets for trailing-four-quarter investment volume (ending in the third quarter of 2025), Seattle had the largest year-over-year increase at 80 percent, followed by the San Francisco Bay Area (up 63 percent) and Charlotte, N.C. (up 48 percent).