Big Banks Resume CRE Lending as Deal Activity Surges

Pandemic Pullback to CRE Rebound

According to The Wall Street Journal and The Real Deal, just a few years ago, big banks were rushing to cut exposure to commercial real estate as fears over office vacancies and loan defaults grew during and after the pandemic. A wave of expected losses, mostly tied to struggling offices, drove major lenders to leave the field open to nonbank and alternative players.

By mid-2024, institutions reported year-over-year declines in commercial real estate originations for six consecutive quarters, leaving developers and owners scrambling for capital as banks prioritized balance sheet repair over new CRE business.

The Details

That narrative is shifting fast. In Q2 2026, Bank of America and U.S. Bancorp each increased CRE loan balances by 8%, PNC Financial Services Group posted a 15% rise, and Truist Financial’s book jumped 25%. The Federal Reserve reports total US bank CRE loans reached $3T in June, up 3% year-over-year.

Originations support the trend: Mortgage Bankers Association data shows $455B in new CRE loans in Q1—an 80% leap from the prior year—confirming that big banks have re-entered the sector in volume, mainly through preferred sectors like multifamily and data centers.

Differentiated Appetite and Lending Standards

While momentum builds, not every institution is equally eager. Some banks, including Bank OZK, are still cutting CRE exposure. OZK reduced its concentration from 52% to 47% between Q1 and Q2.

Those returning to CRE prioritize asset classes with lower perceived risk and stickier demand. Data centers, logistics, and higher-quality multifamily command attention, while office remains scrutinized by credit committees. This selectivity comes even as JLL’s lender sentiment index recently reached record highs, reflecting stronger overall appetite for CRE debt.

Lenders are tightening terms and being selective on sponsors and markets. Recent delinquency waves, especially in underperforming office and retail assets, continue shaping lending decisions.

Why It Matters

The shift matters for liquidity and valuations across US markets. Roughly $3T of CRE loans sit on bank balance sheets, and institutional pullback between 2022 and 2024 contributed to widespread deal gridlock and price discovery challenges. According to the Mortgage Bankers Association, an 80% jump in originations year-over-year highlights the re-emergence of banks as primary deal facilitators.

While multifamily and data center lending leads the charge, a measured thaw in bank participation could eventually bring more capital for other sectors and reduce borrowing costs, pressuring alternative and private lenders who stepped up during the banks’ absence. Still, the recalibration is cautious—with many big banks deploying capital on stricter terms and in strategic pockets. This could lead to competitive tension for favorable deals while keeping broader lending discipline in place.

Bank executives—like Citizens’ Bruce Van Saun—see the environment as safer, but the diversity of strategies (with some banks still retrenching) suggests this is not a full-throttle return. Instead, it signals the industry is recalibrating, with core sectors enjoying renewed capital access. As confidence spreads and balance sheets strengthen, the competitive landscape is poised to evolve again, with risk appetite and regulatory scrutiny dictating how far and how fast banks expand market share.

What’s Next

With more balance sheet capacity coming online, expect competition for prime deals in stabilized multifamily, industrial, and digital infrastructure to intensify in the second half of 2026. The office market remains a holdout, with most banks still wary unless credit enhancement or sponsor track record offsets perceived risk.

Agency lenders and private credit funds may cede ground in those growth sectors, but alternative capital should remain vital for transitional, high-leverage, or non-core assets. Monitoring how banks’ lending standards evolve—and whether more institutions follow the leaders back into CRE—will set the tone for deal flow and asset pricing heading into 2027.