CRE Recovery Drives Lending and Sales Surge

CRE investment sales rose 19% year-over-year through Q3 2025, while debt originations surged 48%, signaling renewed market confidence.
Refinancing activity—particularly in the office and hospitality sectors—accounted for the majority of originations as interest rates fell.
Bank lending grew 85% year-over-year, with CMBS issuance up 37%, contributing to a healthier capital environment.
Experts forecast double-digit transaction volume growth in 2026, driven by operational fundamentals rather than cap rate compression.

Key Takeaways

A Comeback Year for Capital Markets

After a prolonged period of stagnation, the US CRE recovery is gaining traction. CRE investment sales jumped 19% year-over-year through Q3 2025, while debt originations soared 48%, according to a Newmark report highlighted by Commercial Observer and further analyzed by Globe St. The sharp rise reflects growing investor confidence and the tailwind of falling interest rates.

Refis Lead the Way

According to Joe Biasi, head of capital markets research at Newmark, much of the origination activity stemmed from refinancings. Lower borrowing costs helped unlock stalled transactions, prompting both borrowers and lenders to renegotiate terms. Refinancings accounted for 55% of all originations, up from a pre-pandemic average of 47%.

Office and hospitality sectors—still under pressure post-COVID—led the refinancing wave. Debt originations for office climbed 77%, while retail posted a 65% increase.

Lenders Back in Action

The rebound in lending has been broad-based. Bank lending soared 85% year-over-year, while insurance and agency lending rose 29% and 41%, respectively. Overall, national CRE lending volumes reached $587B through the first nine months of 2025—up from $395B in the same period last year.

CMBS markets also saw renewed momentum. Issuance rose 37% year-over-year, and single-asset, single-borrower (SASB) deals made up 57% of originations. Commercial banks remain heavily involved in CMBS executions, especially for stabilized multifamily assets.

While investment sales volumes remain 11% below pre-COVID levels, they rose 15% from Q2 to Q3. Office sales are up 25% year-to-date, with retail up 29%. However, 66% of deals in 2025 have been under $100M, reflecting ongoing caution around larger transactions.

Biasi noted that institutional capital is re-entering the market: In 2025, nearly 40% of office sales in New York and San Francisco were by institutional buyers—up from just 9% two years ago.

Looking Ahead to 2026

Industry optimism is rising. According to CBRE’s Henry Chin, transaction volumes could grow another 16–17% in 2025 and maintain double-digit momentum into 2026. Chin attributes the rebound to stronger leasing fundamentals and demand across sectors like logistics, data centers, and multifamily—not cap rate compression.

Submarkets in cities like Los Angeles, Boston, and Chicago have already hit inflection points, and investors are repositioning capital to capture early-cycle gains.

Why It Matters

This recovery is less about market sentiment and more about tangible operational performance. According to Chin, “The market looks so attractively priced” that 2026 may become a vintage year for strategic capital deployment—especially for firms focused on sector rotation and fundamentals-led investing.

What’s Next

With lending, refinancing, and investment activity all on the rise, and pricing stabilizing across major asset types, the groundwork for a broader CRE recovery appears solid. Executives are preparing for an active 2026—one that could reward early movers who remain disciplined in underwriting and nimble in execution.