Big Banks Just Posted Their Cleanest CRE Numbers in Years

Nonperforming CRE loans fell at every major bank that reported this week. The question now is whether it lasts.

Nina Dale
April 17, 2026

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Good morning. Banks just posted their cleanest CRE loan books in years, but with inflation at 3.3% and a war pushing energy costs higher, that streak may already be on borrowed time.

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CRE Trivia 🧠

Which Las Vegas resort is considered one of the largest buildings in the world, with roughly 7 million square feet under one roof?

(Answer at the bottom of the newsletter)

Market Snapshot

S&P 500

GSPC

7,041.28

Pct Chg:
+0.26%

FTSE NAREIT

FNER

829.77

Pct Chg:
-0.91%

10Y Treasury

TNX

4.313%

Pct Chg:
+0.034

SOFR

30-DAY AVERAGE

3.64%

Pct Chg:
-0.00

*Data as of 4/16/2026 market close.

Bank Lending

Big Banks Just Posted Their Cleanest CRE Numbers in Years

Bank of America | 550 Fifth Avenue

Despite war, inflation, and tanking consumer sentiment, commercial real estate borrowers are still paying their bills, and the country's biggest lenders want you to know about it.

Stress is receding: Nonperforming CRE loans fell across the board in Q1. Bank of America led the pack — its balance dropped 44% year-over-year to $1.19B — with PNC Financial Services Group close behind, reporting a 26% decline to $630M.

Cleaning house: Wells Fargo's nonperforming CRE loans slipped 2.6% to $3.78B. More telling: charge-offs dropped to just $19M in Q1, down from $158M last quarter. "Our credit quality is still really strong," CEO Charlie Scharf said.

Pipelines still open: First Horizon CFO Hope Dmuchowski said CRE pipelines are "strong and present notable opportunities," even as the regional bank posted a minor uptick in nonperforming loans, up 1.7% to $24M. Per FDIC data, the lending rebound that began in 2025 is continuing into 2026 at a measured pace.

The reserve debate: Bank of America freed up $72M from loan-loss reserves in Q1, a move that caught HSBC analyst Saul Martinez off guard, who noted most peers are adding to reserves. CFO Alastair Borthwick didn't flinch: "We just think we've got a higher-quality client base and a higher-quality loan portfolio."

What's still lurking: Annual inflation hit 3.3% in March, up from 2.4% in February, driven by energy costs tied to the Iran conflict, per CoStar economists. Consumer sentiment fell 6% to its lowest since May 2025. Banks are watching closely, knowing the macro picture could shift borrower stress fast.

➥ THE TAKEAWAY

Handle with care: The CRE credit picture is the cleanest it's been in years — delinquencies down, charge-offs cratering, lenders back at the table. But with inflation climbing, energy prices spiking, and a war still unresolved, the runway stays short.

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✍️ Editor’s Picks

ICSC+PROPTECH: The event showcasing the innovation that's driving ROI for CRE takes place during ICSC LAS VEGAS, the world’s largest CRE event, May 18th – 20th. (sponsored)
Builder blues: Builder sentiment fell to a 2025 low in April as high rates, rising costs, and uncertainty weighed on demand.
Risk appetite: Rialto and Blue Owl led CMBS risk buying as issuance slowed but investors still pursued high yields.
Deliver the data: AppFolio research shows 73% of investors want AI-enabled insights. Stop manually merging spreadsheets and deliver the performance analytics your capital partners now demand. (sponsored)
Listing lockup: CoStar is facing a lawsuit claiming it dominates CRE listings and suppresses competition with restrictive practices.
Risk shuffle: BNP Paribas is weighing a €1B CRE loan risk transfer as banks ramp up hedging amid weakening property outlooks.

🏘️ MULTIFAMILY

Insurance fix: NYC plans a city-backed insurance program to cut costs for affordable housing owners by up to 30% and ease development pressures.
Household hiccup: Slowing job growth among young adults is dragging on apartment demand, delaying household formation despite otherwise stable CRE fundamentals.
Senior selloff: Harrison Street has offloaded $2B in senior housing assets, capitalizing on strong demand and favorable demographic trends.

🏭 Industrial

Factory upskill: Google is investing $10M in AI training and apprenticeships to close a growing manufacturing skills gap.
Leasing rebound: U.S. industrial markets are stabilizing as leasing surges and new supply slows, helping vacancy begin to level off.
Fully leased: Terreno completed a 220K SF Miami industrial asset that is fully leased, underscoring continued tenant demand in tight logistics markets.

🏬 RETAIL

Retail megadeal: KingSett and Choice Properties are acquiring First Capital REIT in a $9.4B push into necessity-based retail.
Rent reset: Miami retail rents fell nearly 9% as absorption turned negative and vacancy ticked up, signaling a short-term correction.
Closure wave: 7-Eleven plans a net 440 U.S. store closures as inflation and weaker foot traffic pressure lower-income consumers.
Flagship shift: Nike is eyeing a smaller Chicago flagship move, reflecting a broader pivot toward leaner, experience-driven retail.

🏢 OFFICE

Care capital: Stockdale Capital plans to triple its medical office portfolio as investor demand and favorable lending conditions drive sector growth.
Flex footprint: Coworking now accounts for just 2.3% of U.S. office space, but new data show a significant runway as hybrid demand grows.
Returning demand: Atlanta office absorption turned positive for the first time in over three years, signaling early signs of recovery.

🏨 HOSPITALITY

Booking slowdown: Hotels are bracing for softer-than-expected World Cup demand as high costs and travel barriers curb bookings.
Growth spurt: Phoenix is seeing a surge in hotel development as builders race to meet delayed demand and population growth.
Historic revival: KHP Capital is under contract to acquire D.C.’s long-shuttered Hotel Harrington, signaling potential redevelopment of the historic site.

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📈 CHART OF THE DAY

Cap rates are expected to rise gradually over time—climbing in uneven steps rather than through a sharp reset—as inflation, policy shifts, and market conditions evolve.