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There’s been a shift in commercial real estate lending over the past year.
National banks, previously hampered by troubled loans, upped their lending to recapture more market share in 2025, as have private debt funds which have upped their lending in stronger market conditions. Meanwhile, government agencies and CMBS lenders, typically the top providers of CRE financing, are pulling back.
National banks increased their market share by 5 percentage points to 12 percent in 2025 from the year before, the greatest increase among lender types, according to a report from financial research firm MSCI. This stems from banks having to deal less with poorly performing loans, commercial property prices stabilizing and lending standards loosening.
Meanwhile, other lenders have seen their shares of the CRE market contract. Government lenders held the greatest stake for all CRE lending in 2025, at 23 percent, but that was down from 25 percent in 2024 — this tends to happen as other financing sources step up, according to the report. CMBS lenders, which are facing a wave of maturing loans this year, also dropped their share to 18 percent from 23 percent the year prior.
Investor-driven lenders, which include debt funds, mortgage real estate investment trusts and other private credit lenders, followed national banks with the second-highest increase in its market share That group increased its share by 3 percentage points to account for 14 percent of the CRE lending space in 2025, per MSCI’s report, which analyzed only first mortgage positions.
“They are the most aggressive lenders in the market,” said Jim Costello, chief real estate economist at MSCI. “They’ll come in at higher [loan-to-value ratios] than everybody else, fewer covenants, and they compete to win deals.”
As for investor-driven lenders, unburdened by the tight regulatory oversight banks and insurance companies face, they recorded the highest LTV ratio among lenders last year, of 68.7 percent. That was up from 67 percent in 2024. Investor-driven lenders also increased their average loan size to $21.4 million from $17.2 million, signaling their willingness to lend more aggressively.
This growth stems mainly from debt funds, as there has been a reversal in risk-reward dynamics in commercial real estate, Costello said. Debt, typically a lower-risk, lower-reward investment, is outperforming equity in CRE — even amid a broader pullback in the private credit world, Costello said. However, the high cost of widely available debt is turning off equity investors.
“Nobody really wants to move at that level,” he said. “They don’t want to pay the […] low cap rates with the cost of capital that’s out there on the debt portion. So it is going to limit deal volume to some extent.”
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The shift toward investor-driven capital is most pronounced in construction financing. These lenders originated 34 percent of all construction loans in 2025, cementing their position as the market’s top lender type for the second consecutive year. In 2024, investor-driven lenders handled 30 percent of construction financing and just 20 percent in 2023.