CBRE Survey: Real Estate Lenders Look Past Economic Uncertainty and Gear Up for a ‘Much More Active’ 2025

While some challenges persist for lending in select asset classes, borrowers can expect to see greater debt availability and stronger levels of competition among lenders this year.

So far lenders are not concerned about potential tariffs, and sentiment around commercial real estate lending has improved. According to CBRE’s new Canadian Real Estate Lenders’ Report, lenders are ready to support increased transaction activity and are gearing up for a much more active 2025. While some challenges persist for lending to certain property types and cities, borrowers can expect to see greater debt availability this year.

CBRE’s Lenders’ Report analyzes the responses of 37 domestic and foreign lenders, representing over $200 billion in commercial real estate loans under management combined, to a survey on activity expectations, lending terms and criteria, and lender sentiment and preferences. Lender sentiment matters because the availability of debt will determine if businesses can take on mortgages to grow their footprint or if investors can purchase properties.

“Lenders are feeling increasingly good about every asset class and property type, with levels of concern dropping across the board, except for land and condos,” says CBRE Senior Vice President Jessica Harland. “Nearly half of lenders intend to increase allocations to commercial real estate for a second year in a row and those looking to make a large increase is also up.”

Here are the key takeaways, top cities and target property types, according to the new report:

Alberta sees the largest increase in lender appetite

The top markets of choice for lenders continue to be Toronto, Vancouver, Montreal and Ottawa. Notably, Calgary and Edmonton saw the greatest increases in market rankings in 2025, rising 2 and 4 places year-over-year, respectively. Overall, 73% of lenders are active participants with some level of interest in every Canadian market.

Credit markets are officially open for retail

Lenders are showing a significant shift in demand for retail as evidenced by the surge in intentions to increase budgets in 2025. Nearly half of lenders plan to grow their retail budgets this year, a notable jump compared to the average of 14% seen over the last seven surveys.

Most lenders looking to expand purpose-built rental loans

Purpose-built rental apartments, particularly for Canada Mortgage and Housing Corp. (CMHC)-insured product, continue to be the top targeted asset class for lenders. Debt availability for purpose-built rentals is set to grow the most in 2025 as an average 73% of lenders look to increase their budgets for this sector.

Office buildings no longer untouchable

After declining for five consecutive years, lender intentions to increase office budgets rebounded modestly from 0% last year to 7% of lenders in 2025. The key ingredients to attractive office debt are stable, defensive cashflows which withstand potential vacancy; a strong leasing profile; capable operators; functional physical attributes; and transit-oriented micro-locations.

Stronger debt market liquidity expected in 2025

76% of lenders surveyed are expecting higher loan origination volumes relative to last year, and 24% of lenders are preparing to deploy 20% or more real estate lending capital in 2025. 19% expect their loan origination volumes to hold flat year-over-year and a marginal 6% intend to lower their origination activity in 2025.

Lenders plan to be at their most competitive level in 3 years

Lenders are preparing for a more active 2025 as 70% plan to very actively or actively compete on deals this year. This marks the highest level of intended competitiveness seen from lenders in the last three surveys, where only an average 45% of lenders had plans to actively bid on deals in 2024 and 2023.

Significant hurdles in place for condo development loans

While fewer condo development lenders are requiring more up-front equity relative to last year, it remains the top change that 52% of lenders are making in 2025. 36% of applicable lenders are asking for greater deposit requirements and shorter payment schedules to secure a condo development loan. As well, 68% of lenders currently require 60-79% pre-sale commitments for condo construction financing. Given the weaker condo sales market, this will likely be a more significant financing hurdle than compared to past years.

Property underwriting is the biggest challenge for lenders

Uncertainty surrounding underwriting property valuations is the main challenge, according to 57% of lenders. Alongside concerns with market fundamentals, which also ranked as a top major challenge, lenders have had to shift some of their underwriting assumptions on vacancy and rent growth in the current softer real estate market. The persistent mismatch in buyer and seller expectations has hampered overall investment activity and rounds out the top lending challenges for 2025.

Sustainability impact on real estate mortgages is getting deferred

In 2025 there has been a noticeable increase in the number of lenders that believe it will now take over five years before sustainability criteria will start to materially impact loan terms. Compared to the years prior where more lenders had expected sustainability’s impact to arrive within a few years, this seems to indicate a slight retrenchment among some lenders. Sustainability does remain an important lending criterion for some lenders, as 17% report that carbon footprints are already impacting loan availability and terms.

“Tariffs aren’t registering as a primary concern or altering lending in a material way, but that doesn’t mean things can’t change if the situation evolves,” says CBRE Senior Vice President Joshua Sonshine. “With increased capital flows, compressing credit spreads and momentum continuing to build in both the equity and credit markets, 2025 will be an interesting year and lenders intend to help make commercial real estate trades happen.”