C
ommercial real estate lending showed a glimmer of hope in 2024, rebounding from a tough 2023 with a 16% increase to $498 billion. However, industry optimism has taken a sharp hit heading into 2025.
According to the Mortgage Bankers Association (MBA), multifamily activity and dedicated mortgage banking firms drove the growth, with total lending volume reaching an estimated $326 billion in this sector alone. Mortgage banking firms closed $411 billion in loans in their own name last year, serving as intermediaries on another $303 billion worth of loans.
Despite the uptick in lending, industry sentiment has plummeted. The CRE Finance Council's (CREFC) Sentiment Index dropped 30.5% to 87.9 in Q1 2025, its second-largest quarterly decline ever recorded. This sharp fall follows President Trump's "Liberation Day" tariff announcements on April 2, sparking concerns about economic headwinds.
"The CRE finance industry is at a crossroads," said Lisa Pendergast, president and CEO of CREFC. Industry leaders are cautious, with geopolitical risks and trade tensions topping the list of concerns. A majority of respondents (80%) expect commercial mortgage-backed securities (CMBS) issuance to remain stable or experience only a moderate decline.
With $957 billion in CRE mortgage maturities coming due this year, demand for refinancing and new capital will be key drivers of market activity. As the industry navigates these challenges, it remains to be seen whether optimism will return.
