I
n Massachusetts, banks dominated the commercial real estate lending market in 2024, accounting for nearly two-thirds of all purchase loans. Local and regional banks were among the top lenders, with Rockland Trust leading the pack by volume, followed closely by Enterprise Bank, Eastern Bank, and Salem Five.
According to Jeffrey Tengel, CEO of Rockland Trust, the bank's success in CRE lending stems from its long history and reputation for delivering high-quality loans. "Commercial banking is in our DNA," he said. "We've always done it really well, and we have people who have been doing it for a long time."
Cape Cod 5 President Robert Talerman attributed his bank's success to existing customer relationships, which allowed them to support clients through challenging times. "You take good people, quality clients, and capacity to get things done – it leads to good results," he said.
Dedham Savings found opportunities in development projects due to the MBTA Communities law, while Leader Bank credited innovation for its success in 2024. Matthew Pierce, Leader's chief lending officer, noted that the bank had built out workflows to improve client communication and data collection.
Banks are making up a larger chunk of the CRE funding pool, accounting for 43% of fourth-quarter loan closings nationally. Locally, banks made $20.39 billion in commercial mortgage loans in Massachusetts in 2024, while credit unions made $556.92 million.
Community bank tie-ups are helping smaller institutions fill a need in the local economy and take market share. "We've all grown to the point where we can actually do larger deals," said Peter Brown, president of Dedham Savings.
Banks have more flexibility compared to life insurance companies and alternative lenders, who have a rigid long-term approach that doesn't always mesh well with today's commercial real estate market. "Banks provide greater flexibility of loan terms, loan structure," Talerman said.
Looking ahead to 2025, local bank executives expect to continue building out their commercial real estate loan books, driven by demand for debt despite high interest rates and construction costs. However, competition for deals is expected to be fierce, and banks will prioritize conservative underwriting guidelines.
