Commercial originations surge 52% amid lender “feeding frenzy”

Commercial lending has staged a rebound, with competition heating up among those vying for the best places to deploy their capital.

In the first quarter, commercial and multifamily mortgage loan originations climbed 52 percent year over year, the greatest annual growth since 2022, according to a report from the Mortgage Bankers Association. Originations were down quarter over quarter, by 30 percent, which is aligned with seasonal patterns.

The environment is becoming increasingly borrower friendly as more capital chases more deals, according to John Vavas, a commercial real estate finance attorney at Polsinelli. 

“It’s creating this feeding frenzy in terms of competition amongst lenders to get their money out the door,” he said.

The exuberance is happening even amid changing geopolitical and economic conditions.

“It’s that level of flexibility to get that loan closed in spite of an ever-changing market and landscape,” he said.

The growth in the first quarter, however, was not uniform and reflected a change in where lenders are increasingly placing capital. Healthcare, benefitting from an aging population and growing need for medical facilities, was the leader, recording a 209 percent increase in originations year over year. Retail followed, climbing 148 percent.

Meanwhile, office deals lagged amid continued uncertainty for the sector’s future. Originations fell by 2 percent year over year. This marked a reversal from the first quarter of 2025, when the sector posted a 205 percent year-over-year increase in originations — the greatest growth rate among property types that quarter.

Despite the increasing focus on healthcare and retail deals, industrial continues to remain the favorite among lenders. Industrial deals had the highest volume in each of the first quarters of the past five years.

It’s a sector that has seen rising demand and rents over the past several years.

“As long as the demand is there and it’s showing as an area where there’s going to be continued need for more space, it’s going to be something that lenders are going to want to lend on,” said Michael Lefkowitz, a commercial real estate attorney at Rosenberg & Estis. “Right now, it’s the flavor of the day.”

Another driver behind the growth in originations came from banks and credit unions, which upped their lending by 80 percent compared to the same period last year, per MBA. A large share of bank-held loans are set to mature this year, leading to a wave of refinancings, even in a higher-rate environment.

However, the lender type with the greatest surge in originations was investor-driven lenders, who upped their commercial real estate deals by 133 percent year over year in the first quarter. That was a steep increase from the year before, when investor-driven lenders increased their lending by just 12 percent compared to the year before.

“They tend to be somewhat more aggressive, more interested in and able to write risk,” said Lefkowitz. “When your traditional lenders were out of the market, you saw some of these players were still lending.”

The sole lender group to drop their originations was commercial mortgage-backed securities, a greater share of which have been in special servicing. Those originations slid by 14 percent year over year.

In April, nearly 11.4 percent of CMBS loans were in special servicing, up from 10.2 percent the same time last year, according to a report from research firm Trepp. About 17.7 percent of office CMBS loans were in special servicing last month, the highest share among property types.