We asked some leaders in the industry to tell us what they foresee for the commercial real estate market for the rest of 2025.
Adeel Amin, SVP of Capital Markets, Hunter Hotel Advisors
The market for hotel financing remains bifurcated. Robust appetite persists for high-performing assets demonstrating strong debt service coverage ratios alongside substantial profitability. Beyond this segment, private credit has emerged to bridge the funding gap, offering rates as low as SOFR+ 300 basis points for elite operators with proven business plans and track records. Smaller operators, however, face a higher cost of capital. In essence, while capital for hotels is present, the effective cost of funds presents a significant variance.
Ray Cleeman, Head of Capital Markets and Lending, Pensam
Given the uncertainties in the markets, we anticipate that rates will likely stay elevated through most of 2025. These elevated rates will likely mean that loans that are coming due in the near-term could struggle to meet extension tests, could require paydowns of the senior loan amounts to stay in balance or require incremental capital to get back to cash neutral when they refinance.
Kevin Connolly, Managing Director, Aegon
While most life companies entered 2025 with aggressive allocations, the combination of elevated rates and tariff-driven market volatility during the first half of the year stunted production periodically. We expect that life company lending will remain steady and active for the remainder of 2025 as firms attempt to fill their targets for the year.
Boots Dunlap, CEO/Co-Founder, RRA Capital
With a historic amount of U.S. debt needing to get refinanced this year, and the U.S. fiscal situation getting worse, I expect the bidder pool to be thinning, and U.S. Treasury yields to go up. If this happens, values will fall further, and negative leverage issues will grow worse, causing even the bridge between the financing markets to slow further.
Amy Julian, SVP, CBRE
We continue to see strong liquidity in the CMBS space, and more debt funds are coming back into the office market hungry for high-quality offerings. The majority of banks remain sidelined for office, but a small group are reviewing deals with a focus on sponsor relationship, recourse and deposits. Life insurance companies are very selective as well and may pursue the highest quality, new office product at lower leverage points.
Going forward, we expect debt fund spreads to come in and SOFR will drop as well. This combination will help debt funds compete with CMBS lenders as the gap in the all-in rates will narrow substantially.
Frank Montalto, Managing Director, Capital Markets, IPA
Office financing will remain highly selective as lenders continue to recalibrate their exposure to the sector. There will be a growing bifurcation between well-located, stabilized assets with strong tenancy and commodity B/C product in non-core markets. Lenders are increasingly focused on asset repositioning strategies — particularly conversion plays or assets with flexible zoning — and those will drive more creative capital stacks. Compared to years past, I expect a greater reliance on structured capital, with more participation from debt funds and family office-backed groups filling gaps where traditional banks have pulled back.
Scott Taccati, President, Trillium Capital Resources
The U.S. bridge financing market is projected to grow at a Compound Annual Growth Rate (CAGR) of 14.26%, increasing from $31.3B in 2024 to $69.62B by 2031. This growth is fueled by rising demand for short-term financing in a high-interest-rate environment and increasing property transactions.
The bottom line is this: Bridge lending will be more dominant in the non-bank world because of the uncertain times and interest rate uncertainty. Banks are not generally bridge lenders and heavily rely on guarantor support and are risk averse, primarily due to regulators breathing down their backs. Many bridge lenders are not regulated, thus their value is great during these uncertain times.
