U
.S. commercial real estate lending experienced a strong rebound in the first quarter of 2025, driven by increased bank activity and tighter loan spreads. Despite lingering concerns over federal policy and economic uncertainty, the market demonstrated resilience.

    CBRE's Lending Momentum Index surged 13% from Q4 2024 and 90% year-over-year, surpassing 300 for the first time since Q1 2023 before ending at 292 due to a slight slowdown in March. "Credit spreads continued to compress, enabling sponsors to pursue refinancings and accretive debt," said James Millon, U.S. President of Debt & Structured Finance at CBRE.

    Banks led non-agency lending with a 34% market share, up from 22% in the previous quarter, while CMBS conduits followed closely with a 26% share, tripling their stake from 9% a year earlier. Private-label CMBS issuance increased by 132% year-to-date compared to Q1 2024.

    Loan spreads narrowed, with the average commercial mortgage loan spread decreasing to 183 basis points, down 29 bps year-over-year. Multifamily loan spreads dropped to 149 bps, their lowest level since Q1 2022. Office financing rebounded, driven by diversified tenant needs beyond traditional tech anchors.

    Underwritten cap rates climbed to 6.1%, while debt yields increased to 10.3%. The average loan-to-value ratio dipped to 62.2%, indicating more conservative underwriting standards. Multifamily agency lending totaled $22 billion in Q1, a 15% year-over-year increase despite a 58% drop from Q4 2024.

    The market's adaptability and resilience are evident as it navigates a complex macroeconomic landscape.