Just like Kendrick Lamar, halftime performer at Super Bowl LIX, sang about having hustle and ambition flow inside his DNA, banks seem to have lending to real estate owners inside their DNA. Despite all the noise about problems, the fourth quarter 2024 CBRE Lending Index indicated that banks are back. According to the index, banks made up 43% of all non-agency loans originated by CBRE in the 4th quarter – up from 18% in the 3rd quarter.

But banks are not alone in their desire to ramp up originations. According to Commercial Mortgage Alert, CMBS and CLO lenders are planning to flood the market in 2025 with money as well. Indeed, there are almost 30 CMBS lenders that are looking to put out over $140 billion according to the survey and approximately 35 CLO lenders trying to get out $42 billion.

Agency lenders also plan to increase lending in 2025. The Federal Housing Finance Agency (FHFA) which oversees agency lenders, previously announced that the origination caps for Fannie and Freddie would increase in 2025 to $73 billion each from $70 billion in 2024.

While the so-called wall of maturities should create many opportunities for lenders to refinance mortgages coming due, analysts also believe that a strengthening economy will boost investment sale activity and by extension – loan activity.

So, on the one hand, there should be more demand for loans. On the other hand, a January Federal Reserve survey of senior bank lending officers indicated that almost zero percent reported considerably tightened standards for non-residential and multifamily loans in the prior three months. Now, that could be interpreted to mean lending conditions are so tight that they can’t get tighter, but it also tends to mean lenders are getting back on offense.

In support of the notion that perhaps the worst is behind, several recent office building sales could signal that the bottom is near. One recent trade in particular sticks out. The Ameriprise Center in Minneapolis is a 960,000 SF building occupied by its namesake since it was built in the late 1990’s. The tenant’s lease expires in October and the property was recently sold to Onward Investors which paid $6.25 million for the building according to CoStar – about $6.50/sf. There is no doubt that it is expensive to refurbish a 25-year-old office building, and the market is not in favor of office currently, but that would appear to be a low watermark.

Trepp, which is a data analytics firm based in New York, tracks CMBS loans that go into special servicing. Special servicing is where loans go when there is heightened risk of default or there has been a maturity default. Overall, 9.87% of all CMBS loans were relegated there at the end of January 2025. Topping the list is loans backed by office properties where 15.11% loom, up from 11.25% six months ago. While loans backed by industrial properties continue to be the best performing – only .65% are in special servicing, multifamily loans showed a spike – 8.17% of multifamily loans are there, up from 5.11% six months ago.

Speaking of good industrial metrics, Richmond makes the top five for the lowest availability of space in the country according to CoStar with less than 5% vacancy currently. That compares favorably to the national average of 9.2% vacancy. Another report published by RealPage Market Analytics listed Richmond in the top five for another reason – annual apartment rental growth. Rental growth for the year ended January, 2025 was 3.3%, ranking Richmond fourth in the country, one notch ahead of Washington DC and three notches ahead of Virginia Beach.

While rates remain volatile and there are a few political wild cards floating around, money should start flowing in 2025. After all, if you are in commercial real estate, transactions are in your DNA.