The commercial real estate market in 2024 saw a notable resurgence in lending and borrowing activity, with $498 billion in transactions – an increase of 16% from the $429 billion recorded in 2023, according to the Mortgage Bankers Association. While these figures reflect 2024’s performance, the momentum and trends that emerged are expected to persist into 2025, given the underlying drivers and the volume of maturing debt in the sector.
This rebound was primarily fueled by robust multifamily lending and the continued dominance of dedicated mortgage banking firms, which accounted for $411 billion in loans closed under their own names – a substantial 34% jump from 2023’s $306 billion. The remaining $87 billion in lending came from smaller and mid-sized depositories.
Multifamily properties remained the most active sector, attracting an estimated $326 billion in total lending, with $219 billion directly tracked by mortgage bankers. First liens comprised 92% of the dollar volume closed by mortgage bankers, highlighting a strong preference for lower-risk, senior debt in the current environment.
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Despite the significant increase in activity, the market has yet to recover to the heights of 2022, when CRE lending reached a record $816 billion. The overall transaction volume, while improved, still lags behind the pandemic-era boom, and ongoing caution persists due to high financing costs and uncertainty about future interest rate movements.
A key development in 2024 was the resurgence of CMBS issuance, which now represents about 14% of all CRE lending, supported by attractive rates and expanded program availability. Other major sources of CRE mortgage debt included life insurance companies, pension funds, Fannie Mae and Freddie Mac, and investor-driven lenders such as mortgage REITs and debt funds.
The lending environment benefited from narrowing spreads and increased competition among capital sources. By the end of 2024, the average spread on closed commercial mortgage loans had declined by 49 basis points year-over-year, with multifamily loan spreads tightening to their lowest levels since early 2022.
Banks, in particular, increased their share of non-agency loan closings, while life companies and alternative lenders also played significant roles in the market.
Although transaction activity picked up in late 2024, it remained subdued compared to the previous decade. This reflects ongoing caution among market participants, driven by elevated financing costs and persistent uncertainty regarding the trajectory of interest rates.
Looking ahead, the market is poised for continued activity in 2025.
“With an estimated $957 billion in CRE mortgage maturities coming due this year, demand for refinancing and new capital will be key drivers of market activity,” said Reggie Booker, MBA’s associate vice president of Commercial Real Estate Research.
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