The U.S. commercial real estate lending market has pushed forward for Q3. That's fueled by a surge in acquisition financing and strong issuance across asset classes, according to CBRE’s latest Lending Momentum Index. The metric, which tracks CBRE-originated commercial loan closings nationwide, jumped 13% from Q2 and 15% year-over-year, inching closer to pre-pandemic levels at 214.

“Acquisition financing rose throughout Q3, supported by accretive leverage and renewed lender interest in high-quality assets, especially large office transactions in New York City,” said James Millon, CBRE’s U.S. president of debt & structured finance. Millon noted that liquidity returned notably for top-tier office assets backed by institutional sponsors with conservative leverage.

Government agencies played a significant role in the multifamily market, where lending spiked 40% to $28 billion in Q3. Meanwhile, life companies took the lead among non-agency loan closers, capturing 43% of CBRE’s total originations—up from 33% a year ago. Alternative lenders like debt funds and mortgage REITs weren’t far behind, accounting for 34% of loan closings, a 27% increase year-over-year, with debt fund originations alone up 70%.

Banks, however, have been scaling back, reducing their share of non-agency loans to 18% from 38% last year, as regulatory pressure mounts and the threat of distress remains persistent. Despite the pullback, banks are still actively syndicating loans for high-demand asset classes like industrial, multifamily, and data centers.

CMBS conduits, covering 5% of non-agency originations, saw issuances spike, with total volume reaching $29 billion—a threefold increase from last year. Industrial, multifamily, and data centers drove originations, as these sectors continue to show resilience.

"Our fastest-growing segment was the GSE space—up 80% compared to last year—as lower base rates allowed borrowers to maximize proceeds versus other capital sources," Millon added.

CBRE found that changes to underwriting standards were minimal in the third quarter. Average underwritten cap rates and debt yields each edged up 20 basis points quarter-over-quarter, reaching 6% and 9.9%, respectively. Also, Loan-to-value ratios ticked up to 62.8% from 61.6% in Q2.

CBRE’s findings reflect a lending boost that aligns with trends reported by the Mortgage Bankers Association, which cited renewed investor interest and strong origination activity across key sectors. MBA data showed healthcare properties leading originations with a 510% year-over-year increase, followed by hotels at 99%. Retail, industrial, and multifamily originations were up 82%, 57%, and 56%, respectively, while the office sector continued to lag, down 3% in Q3 after a 20% dip in Q2.

As mortgage originations grow, analysts suggest that a steady interest rate environment could sustain growth in high-demand, resilient sectors like healthcare and multifamily.

Instant Insights /

CRE Lending Approaches Pre-Pandemic Levels Despite Office Sector Struggles

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