via CRE Daily <— Click here for full article
| Commercial real estate borrowing costs are easing, though not every property type is benefiting equally. CRE financing spreads have compressed across all major sectors since May 2025. Multifamily leads with the tightest spreads at 152 bps over Treasuries. Office spreads remain elevated, maintaining a 71 bps premium over multifamily. Institutional CRE loan rates are expected to settle in the low-to-mid 5% range in 2026. |
| By the numbers: CRED iQ data from May 2025 to February 2026 shows spreads tightening across all major property types. Multifamily leads at 152 bps over Treasuries (down 14 bps), followed by industrial at 163 bps, while retail saw the biggest gain, compressing 15 bps to 173 bps as lender demand rebounds. |
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| Sector snapshot: Multifamily and industrial remain lender favorites, backed by steady demand and occupancy. Retail’s rebound reflects renewed confidence in strong, necessity-based assets—capital is returning, but selectively. |
| Office still carries a premium: Office spreads tightened from 237 bps to 223 bps, but still sit 71 bps above multifamily. High vacancies and return-to-office uncertainty keep lenders cautious, with even trophy assets like Netflix’s Los Gatos HQ pricing in line with broader office spreads. |
| What’s next: CRED iQ expects further modest compression through 2026, with multifamily potentially below 150 bps and industrial under 155 bps. Office’s premium may narrow but remain above 55 bps. With the 10-year Treasury at 3.85%–4.00%, top-tier CRE loans could price in the low- to mid-5% range, down from 6%+ in early 2025. |
| ➥ THE TAKEAWAY |
| Capital returns: Capital is flowing back into CRE—but it’s discriminating. In today’s market, compression is real, but so is the risk divide. |
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