Latest Finance Trends

We asked some leaders in the industry to tell us what they foresee for the commercial real estate market in 2025. More

The Mortgage Bankers Association (MBA) and CBRE both released positive third quarter numbers for commercial real estate; a trend that is expected to continue until the end of the year. Lower rates were a big factor in these positive numbers and most property types showed increases in dollar volumes. Multifamily had a very favorable third More

Self storage has been one of the better performing asset classes, which will lead to plenty of available capital next year. The permanent finance market is strong with both CMBS and life companies offering solid attractive options. However, bank financing, especially construction financing, is currently more difficult. Many bank lenders continue to sit on the sidelines. Expectations for the economy to improve with limited inflation risk will show confidence in the market for banks to get back into lending. More

Count on more available capital for hotels in 2025 due to pent-up demand and investor eagerness to transact. Hotels will become a more preferred asset class as there is strong value potential; look for more sales activity going forward. Terms will largely stay the same, but there will be more participants willing to lend. Lenders More

Retail will continue to be a preferred product type going forward. Underwriting standards will loosen with declining interest rates. There has been so little development in retail, which has allowed the sector to maintain high occupancy. Look for a push toward new development next year. The location will not be as important going forward; as long as it’s a strong center with favorable tenants, borrowers will see available capital. Demand drivers will be key going forward. CMBS lenders are back versus a few years ago leading to more capital and competition in the space. More

Condo lending will open next year, especially as rates come down. Demand will be stronger as workers return to cities where condos are more affordable and often more convenient. Underwriting will loosen as rates drop, which will be beneficial to borrowers. The biggest factor will be presales. The construction lending market for condos will be liquid, especially among the debt funds. Lenders want to see presales that support the underwritten sellout, and lenders will be leverage-sensitive due to the usage of borrower deposits in certain states, which creates additional leverage for the sponsors. There will also still be a need for condo inventory loans as developers need time to sell once they are built. More

Watch for CMBS lending volume to vastly improve next year and pick up even more in 2026. Borrowers will like this option as the majority of conduit deals are sized off of an interest-only debt service, which allows CMBS to offer higher proceeds. Also, most banks now demand a deposit relationship of a minimum of 10% of the loan amount, which CMBS lenders do not require. Also, CMBS lenders do not charge origination fees compared to most banks, which charge anywhere from 0.50% to 1%. Most conduit CMBS loans are interest only for some part of the term allowing additional cash flow after debt service, which is very attractive to borrowers. More

Anticipate strong demand from lenders for industrial product. Watch for them to become more creative with structure in order to compete. With a lot of industrial having been built over the past few years, lenders will focus on markets with strong occupancies and reasonable rents. Although, any property that has strong market fundamentals should receive more favorable terms on both bridge and permanent financing. More

Watch for life companies to have a huge lending appetite next year, leading to plenty of available capital. Most LCs plan to beat their 2024 allocations in 2025. Rates are expected to drop again, which will encourage borrowers to proceed with refinancing or acquisitions. This surge in transactional volume should increase life company originations. Borrowers will see higher leverage and lower debt yield minimums. Anticipate LCs to be more detailed in their underwriting and look closer at rent trends, co-tenancy and retention ratios. More

The outlook for office lending in 2025 is positive with meaningful improvements and increased liquidity. The market is starting to see some favorable trends in certain pockets relative to utilization, rents and vacancy. Watch for a flight to quality as lenders favor Class A office buildings. CMBS lenders will be active for well-performing office assets in strong markets. Banks will likely remain sidelined for the remainder of 2024 but will slowly and selectively re-enter the space in 2025 with building sales and loan sales starting to remove office loans from their balance sheets. More

Bridge capital will be one of the main sources of lending for the remainder of the year and going into 2025. There are always deals toward the end of the year that require quick-close bridge financing. Count on a very active 2025 as bridge lenders will be a strong option for ground-up construction and heavy value-add deals. Watch for more permanent lenders expanding their programs into the bridge and construction space as a way to generate extra yield. More

We asked leaders in the C-PACE field to give us their thoughts for this financing type going forward including predictions, challenges and trends.  More