Commercial Property Managers NAICS 531312

Jun 16, 2025 - Commercial Real Estate Lending Improves in Q1 2025

• Lending activity in the commercial real estate market saw robust growth in the first quarter of 2025 despite economic uncertainty stemming from government policy and its impact on Treasury yields, according to CBRE. The CBRE Lending Momentum Index rose by 13% in the first quarter of 2025 compared to Q4 2024 and increased 90% over Q1 2024. The Lending Momentum Index tracks CBRE-originated loan closings in the US. Banks led non-agency loan closings in the first quarter with a share of 34%, followed by commercial mortgage backed securities (CMBS) conduits (26%), life insurance companies (21%), and alternative lenders, such as debt funds and mortgage REITs (19%).
• Fitch Ratings’ US CMBS delinquency rate rose by seven basis points to 3.08% in May 2025 from 3.01% in April. The May rise was driven by increased new office delinquencies and reduced resolution activity. Commercial mortgage-backed securities (CMBS) are fixed-income investment products backed by mortgages on commercial properties rather than residential real estate. The delinquency rate is the percentage of commercial real estate loans that were 30 or more days past due or in foreclosure. A rising delinquency rate indicates that an increasing number of commercial property owners cannot pay the mortgages on those properties. Current and prior-month delinquency rates for May and April were: Office: 7.70% (from 7.42% in April); Retail: 3.81% (from 3.79%); Hotel: 3.18% (from 3.45%); Multifamily: 0.90% (from 0.79%); Industrial: 0.71% (from 0.60%); Mixed Use: 4.35% (from 4.60%); Self-storage: 0.08% (from 0.05%); and Other: 1.34% (from 1.32%).

• Utilities and grid operators are grappling with a flood of speculative interconnection requests for data centers that may never be built, according to Utility Dive. Grid optimization software firm Camus Energy estimates there are between five and 10 times as many interconnection requests as the number of data centers being built. US data center load growth forecasts often diverge widely. A 2024 projection by the RAND Corporation estimated the AI sector would boost power demand by 347 gigawatts (GW) by 2030. In April 2025, Schneider Electric cited other sources that estimate growth will be less than 100 GW. Speculative requests by data center developers make it challenging for grid operators and utilities to plan for future power needs. To reduce the risks of overbuilding, some utilities are introducing standardized large-load interconnection processes, and others are requiring data center developers to shoulder more of the upfront costs.
• Office property insiders suggest it may take years for the office sector to recover as so-called zombie buildings cast a long shadow over business districts across the country, according to The Wall Street Journal. Investors, often private equity firms, that own large office buildings, bought them with money borrowed from issuing bonds called commercial mortgage-backed securities. Some building owners have written off their investments as vacancy rates have remained stubbornly high. Such buildings end up being controlled by bondholders in foreclosure. Bondholders are temporary landlords, often fighting amongst themselves to cash out. Such owners have little interest in investing in improvements to attract tenants, and the buildings remain largely empty. Industry watchers say it may take years to reposition zombie buildings as tenants prefer newer offices in trendier areas.