Commercial real estate lending has continued to tighten across all major property sectors, with spreads over Treasurys narrowing between mid-2025 and February 2026, according to a new analysis of loan originations from CRED iQ. The firm found that while every property type saw compression, the pace and scale of improvement diverged sharply across sectors.
Multifamily emerged as the clear leader, with spreads shrinking to 152 basis points over Treasurys, down from 166 basis points in May 2025. Industrial followed, tightening from roughly 170 to 163 basis points, driven by investor appetite for logistics and warehouse assets with investment-grade tenants, CRED iQ noted.
Retail recorded the steepest year-over-year improvement, with spreads compressing from 188 to 173 basis points. Lenders showed renewed interest in grocery-anchored and experiential retail centers offering strong occupancy and consistent cash flow.
Office properties, however, continued to lag well behind. The sector's spreads eased from 237 to 223 basis points, leaving a 71-basis-point gap from multifamily. CRED iQ described this as a "persistent risk surcharge," citing continued uncertainty over workplace attendance, tenant downsizing and elevated vacancy levels. Even prime assets reflected this caution: one recent example was a loan on Netflix's Los Gatos headquarters, which carried a 6.03% coupon, a 55.4% loan-to-value ratio and a 1.69x debt service coverage ratio.
Looking ahead, CRED iQ expects modest further tightening by the end of 2026. Multifamily spreads could slip below 150 basis points, while industrial may settle near 155. The firm anticipates the gap between office and multifamily to narrow somewhat but remain above 55 basis points as the office sector continues to adjust to post-pandemic fundamentals.
Based on a base-case 10-year Treasury forecast of 3.85% to 4%, CRED iQ estimated that "all-in" rates for institutional-quality CRE loans should land in the low-to-mid 5% range for favored property types—an improvement from the 6%-plus levels seen in early 2025. However, Chatham Financial's current 10-year forward curve, which reflects market-implied yields rather than an actual forecast, indicates yields could stay above 4.2% and finish 2026 near 4.4%.
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