CRE Investment and Lending Surge as Private Buyers Lead the Way
Both commercial real estate investment and lending activity were up significantly in Q1, according to a new CBRE report.
CRE investment volume was up 14% year-over-year to reach $88 billion in the first three months of 2025. Trailing four-quarter volume was up by 18% year-over-year to $408 billion. That’s the largest amount since the third quarter of 2023.
As one might expect with a large jump in investment, there was also a big increase in lending activity. The CBRE Lending Momentum Index grew by 13% quarter-over-quarter and 90% year-over-year in the quarter, with the larger financing amounts fueling the larger volume of loans. Banks accounted for 34% of loan closings by non-agency lenders, up from 22% in the first quarter of 2024. CMBS was the second most active lending type for the first time since 2019, at 26% of closed non-agency loans, up 9% from the previous year. Life companies kept their 21% share as they did last year. Alternative lenders took the remaining 19% of closings. That was down 48% from 2024.
The top 10 metro areas by year-over-year investment volume growth were Seattle (114.4%), Portland (82.9%), Las Vegas (69.6%), Salt Lake City (67.1%), Denver (56.7%), South Florida (54.3%), San Francisco Bay Area (53.8%), Charlotte (47.6%), Orlando (44.6%) and San Diego (41.8%).
The RCA Commercial Property Price Index was up overall by 1% year-over-year. By property type, it varied. For example, office was (-1%), industrial (+2%), retail (+3%), multifamily (-1%) and hotel (-9%).
The biggest group of buyers was private investors. They accounted for $51 billion, or 60% of the quarter’s transactions. The amount invested increased by 19.1% year-over-year and made up 55.3% of the total last quarter. The second largest group by amounts invested was institutional investors at $20 billion, or roughly 22.1% of the volume. Institutional investors showed a 106.7% year-over-year increase in activity. Both pools were net buyers.
The other groups were net sellers. REITs and public companies invested $4.8 billion; that was 5.4% of the total but also a 69% drop from Q1 2024. Cross-border investors put in $4.3 billion, which was 4.9% of all the investment. Then there was another $8.7 billion spread across “other” investor types that made up 9.8% of the total.
AFIRE’s quarterly survey of its members showed a sharp drop in global confidence in U.S. CRE. However, property markets here still had the perception of being a safe investment environment, or at least they did as of March 2025. CBRE listed the top origin countries in cross-border investment for the trailing four quarters ending in Q1 2025: Canada ($7.3 billion), Norway ($2.6 billion), U.K. ($2.3 billion), Japan ($2.1 billion), German ($1.3 billion), Bahrain ($1.1 billion), Singapore ($0.9 billion), Israel ($0.7 billion), Switzerland ($0.7 billion), and the Netherlands ($0.3 billion).
Source: GlobeSt/ALM