Our recent webcast featuring Trepp’s Ian McCready and Andy Boettcher offered a detailed snapshot of the commercial real estate (CRE) and corporate loan markets heading into year-end 2025. The message: conditions in commercial real estate are improving but patchy, corporate lending remains comparatively stable, and banks’ credit decisions matter more than ever. Here are some takeaways:
CRE Lending Is Coming Back—Carefully
Bank CRE originations have climbed back to about $6 billion in Q2 2025, up from $3.2 billion at the low point in 2023. “We’re seeing improvements in office delinquency, and modest improvements in the overall classification rate,” McCready said. Multifamily continues to dominate new credit, though he added that “it’s been a rough few years … [we’re] excited to see the balances coming back.”
Those new loans “aren’t just extensions of existing loans,” Boettcher noted; they are “full, re-credit decisions being made by the bank.”
Office and Multifamily: Mixed but Improving
Office loan delinquencies at banks have now declined for four straight quarters, falling from roughly 7.5% to 6%. “Maybe this is the start of something good,” McCready said. Multifamily loan delinquency, by contrast, continues a slow upward climb—now 1.9%—a trend both speakers linked to rising insurance and tax costs that landlords can’t easily pass through to tenants.
Spreads Stabilizing, Risk Easing
Boettcher said growing certainty regarding banks’ cost of funding and the return on loans is “a signal that banks are going to be more comfortable taking some risk going forward.” Across asset classes, spreads have been slowly “grinding lower” since April, signaling greater pricing confidence after tariff-related volatility.
C&I: A Steadier Picture
C&I portfolios look healthy. “It does appear to be … a consistent asset quality story,” Boettcher said. Delinquencies and charge-offs remain below pre-COVID levels, with the bulk of credits rated in the “4-5 category.” Many banks, he added, have diversified their book from commercial real estate into C&I for “stability of cash flows.”
The Takeaway
From Trepp’s view across bank, securitized loan, and consortium data—its anonymized repository of loan-level information from participating banks—CRE stress is still concentrated in B- and C-class offices and some Sun Belt multifamily markets. But risk ratings, charge-offs, and new-loan activity all point in a healthier direction. As McCready summed up, “Banks are lending again and moving through their CRE portfolios.”
