Lenders remain optimistic about commercial real estate market
Commercial real estate lenders are maintaining a positive outlook despite ongoing global uncertainty, with most planning to increase their loan portfolios in the coming months.
According to the CBRE Lender Sentiment Survey, 56 percent of lenders expressed intentions to grow their commercial real estate exposures, while none of the surveyed lenders planned to decrease their lending activities.
The survey, which gathered responses from 34 commercial real estate lenders, revealed steady demand for commercial mortgages over the past year.
The industrial and logistics sector continues to dominate investment preferences among lenders, followed closely by residential property.
Build-to-rent properties ranked third in popularity, showing a slight increase in interest compared to the second half of 2024.
Student accommodation has emerged as a significant area of interest, with nearly a quarter of lenders ranking it among their top two preferences.
Meanwhile, lenders maintain a cautious approach toward office real estate, reflecting ongoing concerns about the sector’s performance.
Data centres, which were highly favoured in the second half of 2024, have seen a decline in preference, dropping from third to fifth place among lenders’ priorities. This shift indicates changing dynamics in the commercial property landscape.
CBRE Research found that asset type and location were among the top three factors influencing lender appetite for refinancing.
Regarding interest rates, more than half of the surveyed lenders anticipate two additional rate cuts during the remainder of 2025. However, there was no consensus among lenders about where the cash rate might stand by June 2026.
Andrew McCasker, CBRE’s managing director of debt and structured finance, pointed to strong fundamentals supporting the lending market.
“The domestic banks sit on strong balance sheets and there has been a significant amount of capital raised in the private credit sector,” Mr McCasker said.
“This is underpinning competitive tension and strong appetite for lending to quality assets and sponsors.”
The office sector continues to face particular scrutiny from lenders. Will Edwards, CBRE debt and structure finance director, said that a selective approach is being taken.
“Amid caution in the office sector, we are seeing lenders take a considered approach to the sector reflective of flight to quality in the asset class,” Mr Edwards said.
Despite elevated costs of debt, the overall sentiment among commercial real estate lenders remains positive, with increased appetite for new loans anticipated over the next three months.
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