- Retail CRE lending by US banks is increasing after years of contraction.
- 11 of 18 major banks reported higher retail loan balances in 2025.
- Open-air shopping centers and grocery-anchored properties are strong performers.
- Banks are also lending to private credit, often in senior debt positions.
Retail CRE Lending Rebounds
Banks are cautiously returning to retail CRE lending after several years of shrinking portfolios, reports Globe St. Recent S&P Global Market Intelligence data shows a majority of large US banks with over $1B in retail and shopping center loans increased their exposure in 2025. This shift coincides with improved loan performance in open-air retail, especially as Gen Z spending outpaces other generations and investor confidence returns.
Why Retail Properties Attract Banks
Retail CRE has defied gloomy predictions, with fewer credit surprises and solid fundamentals, according to S&P’s Nathan Stovall. Grocery-anchored centers continue to show strong performance and borrower demand. While the market is not overheating, steady improvement is notable, and banks are finding fewer reasons to shy away from retail lending. Rising refinancing activity—often handled by private credit—has also lifted property values more than expected.
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Private Credit’s Growing Role
While private credit remains a major player in retail CRE, banks are increasingly lending to these firms as well. In many cases, banks hold senior positions in the capital stack, reducing their risk exposure. This dynamic allows banks to participate in deals with improved protection, while private credit absorbs the first layer of potential losses in distress scenarios. The growing partnership reflects a broader shift across CRE finance, where private lenders are increasingly competing with traditional banks while reshaping how deals get funded.
Bank Fundamentals Strengthen
US bank balance sheets are healthier than during past downturns. Tangible equity now stands at 9% industrywide—three times higher than during the global financial crisis. Loan-to-deposit ratios and reserves have also improved, supporting a gradual return to retail CRE lending. System-wide risk has diminished, helping banks regain confidence in select retail sectors.
