This is one of those times that CRE finance can seem like a spaghetti western from Sergio Leone, only without the snappy score.
A recent Trepp research paper examined bank CRE loan performance in the last quarter of 2024. It was a good, bad, and kind of an in-between theme. Specifically, it included rising originations, mounting office challenges, and a mixed outlook for multifamily.
Trepp analyzed trends in its anonymized set of loan-level data. It comprises bank balance sheet loan data covering a “diverse set of loans totaling about $190 billion sourced from multiple banks.” As they use a dynamic dataset, participants can change and alter reported figures between quarters. Given the description, this could well not be representative of national bank lending. But it does offer a look at a relatively coherent segment at a level often not available in analyses, given the loan-level and not institution-level nature of the data.
Recommended For You
Origination volumes rose through 2024 and reached $5.6 billion in Q4, up from $4.5 billion in Q3, $3.9 billion in Q2, and $3.5 billion in Q1. Industrial (54% year-over-year increase in the quarter) and lodging (42% year-over-year) saw the biggest activity.
Various factors have helped to rebuild originations, including a decline in financing costs as the Federal Open Market Committee cut the federal funds rate by 100 basis points and pent-up demand showed up from postponed 2023 transactions.
However, originations were still significantly off pre-pandemic levels. Overall, Q4 in 2024 compared to 2019 showed an overall drop of 41%. By property type, it was -55% for multifamily, -54% for office, -32% for retail, -3% for lodging, and -47% for industrial.
Net charge-offs of office loans were up by almost 20 basis points, which worsened bank loan profile risk portfolios. But that was only one quarter. Starting in Q1 2023, office loan net charge-offs started racing upwards, eclipsing the former highest in charge-offs, lodging. By the end of 2024, the office charge-off rate topped 3%. Ongoing remote work trends led to higher vacancy rates and declining property income, leaving many landlords finding it a growing challenge to meet debt service obligations.
Multifamily has done well in some ways. Given demand in suburban markets, properties maintained “relatively high occupancy rates.” However, the delinquency rate was up seven basis points from 1.37% in Q3 to 1.44% in Q4—the only property type that saw an increase. The multifamily-critical loan rate was particularly significant in Washington, D.C., San Francisco, and New York. According to Trepp, banks will likely see a bifurcation in properties.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
