- Bank lending to commercial real estate surged 85% year-over-year as institutions like Frost Bank reengage with the market.
- Regional banks are competing with private debt funds and securitized lenders for top-tier projects, but many remain disciplined on loan structure over pricing.
- With $2T in CRE debt maturing by 2027, refinancing demand is expected to grow, driving further activity despite concerns over distressed loans and industry M&A shifts.
Banks Are Back
After a year of balance sheet cleanup, banks are returning to commercial real estate lending, reports Bisnow. The result is one of the most competitive lending environments in recent memory.
Executives at Houston-based Frost Bank say the influx of lenders, including debt funds, is intensifying competition for top-tier deals. Frost, which had a $10B CRE portfolio as of Q3 2025, continued lending during the downturn. But now, even long-active banks face more pressure to win deals.
Discipline Over Deals
Despite the competition, Frost says it won’t chase deals at any cost. “We can adjust rates and fees,” said Anna Pawlik, EVP of CRE banking. “But we won’t compromise on equity requirements or loan guarantees.”
The bank’s relationship-focused model helps it stay selective. If a borrower is simply looking to place a loan, Pawlik says a debt fund might be a better fit. In Houston, Frost is currently most active in retail and industrial development.
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Lending Momentum Builds
Nationwide, CRE loan issuance by banks has rebounded to pre-pandemic levels. According to Newmark, origination activity rose 48% year-over-year through the first three quarters of 2025. Banks remain the top source of CRE financing, making up 38% of all lending. Still, debt funds and securitized lenders are gaining share.
Newmark data shows that investor confidence is rebounding. Lending has increased across sectors, especially in office, senior housing, and retail. Meanwhile, some lenders are opting to extend existing loans, which has temporarily postponed the wave of distress many had anticipated.
Wave of Refinancing Ahead
CRE lending is expected to stay strong through 2027. Around $2T in debt will mature during that time, creating high demand for refinancing or sales. Roughly $573B of that debt is considered at risk of distress, according to Newmark.
M&A Could Shift Lending Landscape
Bank consolidation may also affect CRE lending, especially in Texas. SouthState’s merger with Independent Financial, along with Veritex joining Huntington Bank, could change allocation strategies as these lenders reset their targets.
What’s Next
With capital flowing back into the market and refinancing needs rising, CRE lending is poised for continued growth. But competition, pricing pressure, and loan discipline will remain key challenges for lenders navigating the current cycle.
