U.S. commercial real estate lending surged at the end of 2025, signaling renewed momentum across large segments of the property finance market as interest-rate volatility eased and banks re-entered the arena with greater conviction.
Commercial and multifamily mortgage originations jumped 30% in the fourth quarter from a year earlier and climbed 25% from the prior three months, according to the Mortgage Bankers Association’s latest quarterly survey released at the industry group’s 2026 Commercial/Multifamily Finance Convention in San Diego. The data points to a broad rebound in borrowing activity after a muted 2024, though performance varied sharply by asset class.
“The final quarter capped a notably stronger year for commercial and multifamily lending,” said Reggie Booker, the MBA’s associate vice president of commercial and multifamily research. Depository institutions — including banks and thrifts — drove much of the late-year acceleration, he said, as steadier interest rates and improved pricing clarity encouraged lenders and borrowers to transact. Even so, Booker cautioned that demand remains “uneven across property types,” reflecting ongoing structural shifts in office and hospitality markets.
Office Leads Annual Gains Despite Quarterly Stall
Measured against the same period in 2024, originations expanded across most major property sectors in the fourth quarter, led by a sharp rebound in office financing. Dollar volumes for office loans nearly doubled, rising 95% year over year. Industrial lending increased 23%, multifamily rose 22%, and health-care properties advanced 20%.
Retail and hotel assets bucked the trend. Retail loan volumes fell 12% from a year earlier, while hospitality originations dropped 34%, underscoring lingering investor caution toward consumer-facing real estate and travel-dependent properties.
Banks Reclaim Market Share
Banks emerged as the most aggressive source of capital. Lending by depositories surged 74% from the fourth quarter of 2024, far outpacing other capital providers. Investor-driven lenders posted a 46% increase, while issuance of commercial mortgage-backed securities climbed a more modest 5%. Government-sponsored enterprises Fannie Mae and Freddie Mac recorded a 4% rise, and life-insurance companies edged up just 1%.
Quarter-to-quarter comparisons showed a similarly bank-led expansion. From the third to the fourth quarter of 2025, overall originations rose 25%, with industrial properties leading the advance at 29%, followed by multifamily at 17%. Health-care and hotel lending each ticked up 2%. Retail volumes fell 32% and office slipped 1%, suggesting that the sector’s annual rebound was driven largely by earlier-year transactions rather than late-year momentum.
Among lender categories, depositories again posted the largest sequential increase, with volumes up 54% from the third quarter. Life-insurance companies expanded originations 27%, investor-driven lenders rose 21%, and CMBS issuance grew 6%. Lending by the government-sponsored enterprises was essentially flat.
Full-Year Rebound Signals Broader Recovery
Preliminary figures indicate that total commercial mortgage originations in 2025 climbed 40% from 2024 levels, marking one of the strongest year-over-year recoveries since the pandemic-era disruption. Office financing recorded the most dramatic turnaround, soaring 146% for the year. Multifamily lending increased 36%, retail 27%, industrial 20%, and health-care 7%. Hotel originations declined 7%, the only major sector to post an annual contraction.
The recovery was broad-based across capital sources. Banks increased lending 74% for the year, investor-driven lenders rose 59%, government-sponsored enterprises advanced 27%, life insurers gained 23%, and CMBS volumes grew 8%.
The figures suggest that while the commercial property market remains bifurcated — with clear winners and laggards — capital availability improved materially in 2025 as rate stability returned and lenders regained confidence in underwriting conditions. Whether that momentum carries into 2026 may hinge on the durability of economic growth and the trajectory of borrowing costs.
Sign Up Free | The WPJ Weekly Newsletter
Relevant real estate news.
Actionable market intelligence.
Right to your inbox every week.
Real Estate Listings Showcase
Please visit:
Our Sponsor
