The overall sentiment seems positive for commercial real estate lending going forward, especially as many lenders increase their 2025 allocation totals. CMBS lenders in particular are expected to be more active throughout the year, while many banks who have been on the sidelines are re-entering the game. Most life company lenders also plan to increase origination totals in 2025. Private money, bridge lenders and debt funds are all also striving to compete. Equity investing should also pick up this year as investors have tons of dry powder they would like to get out the door.
The increase in lender and investor competition should equal much more attractive terms for borrowers including higher leverage; however, issues with rates and other economic uncertainties could lead to continued caution with underwriting. Also, watch for lenders to consider different property types than they would last year such as strip retail, student housing and even some office buildings with strong fundamentals. Watch for more available construction money going forward. Also, keep an eye out for banks and life companies to start providing bridge loans in order to grab yield.
Total commercial and multifamily mortgage borrowing and lending is expected to rise to $583 billion in 2025, which is a 16% increase from 2024’s estimated total of $503 billion, according to the Mortgage Bankers Association (MBA) updated baseline forecast released at its 2025 Commercial/Multifamily Finance Convention and Expo.
Multifamily lending alone is expected to rise to $361 billion in 2025 — a 16% increase from last year’s estimate of $312 billion. MBA anticipates 2026 originations to increase to $709 billion, with $419 billion of that total in multifamily lending.
CBRE also announced that the multifamily market is rebounding, driven by declining vacancy rates and robust absorption. Positive net absorption — which measures the change in the number of occupied units — reached 183,600 units in Q4 2024, the strongest Q4 performance on record and 12 times more than the pre-pandemic Q4 average according to CBRE. This marks the third consecutive quarter where demand surpassed new completions, further narrowing the annual completions-over-demand gap. Healthy renter demand outpaced new deliveries in Q4 2024, lowering the overall multifamily vacancy rate to 4.9%, pushing it below its long-term average of 5%.
CBRE also forecasts steady growth in hotels this year. The firm predicts a 2% increase in RevPAR growth in 2025, with occupancy improving by 23 basis points and average daily rate (ADR) increasing by 1.6%. This projected growth indicates the continued recovery of the lodging industry, with RevPAR expected to be 16.6% higher in 2025 compared with pre-pandemic levels in 2019.
After a few slower years, these positive numbers and more lender dollars in the sector should make for a strong year and pave the way for an even stronger 2026.
