Lending Reaches 5-Year High As Alternative Funds Flood In

Commercial real estate lending reached a five-year high in Q1 2026, according to CBRE’s Lending Momentum Index, as growing capital pools and an influx of alternative funds drove transaction volume higher. Average loan sizes increased 14% year-over-year, while CRE loan spreads tightened 2 basis points to 181 basis points and multifamily spreads compressed 13 basis points to 136 basis points on fixed-rate loans at approximately 60% loan-to-value. The data reflects a lending environment that is both active and disciplined, supported by rising acquisitions and increased equity inflows.

Our Take

For private market investors, this report sends a clear and constructive signal: capital is returning to commercial real estate with purpose and structure, not speculation. The combination of a five-year lending high, tighter spreads, and rising loan sizes points to a market where lenders are gaining confidence and transaction activity is accelerating in a measured way.

From an underwriting perspective, the spread compression reported by CBRE is particularly meaningful. When spreads tighten, it reflects increased competition among lenders for quality deals, which generally benefits borrowers through better pricing and terms. The 13 basis point drop in multifamily spreads, down to 136 basis points, is a strong indicator of how much conviction lenders currently have in that asset class. Multifamily has long been anchored by durable demand drivers, and lenders are pricing that stability directly into their terms.

The 14% rise in average loan size year-over-year also deserves attention. Larger loans typically signal that more institutional-scale transactions are getting financed, which reflects a market that has moved past the hesitation of the past few years and is now processing meaningful deal flow. Alternative funds flooding into this space, as the article describes, are adding depth to the capital stack and helping bridge gaps that traditional lenders have historically left open.

In practical terms, this environment rewards investors who have maintained disciplined underwriting through the slower period. As lending conditions improve and equity inflows rise, the assets and sponsors who stayed active and selective are now better positioned to transact, refinance, and grow. The key takeaway is that patient capital, deployed with conservative leverage through the uncertainty, is entering a moment where the market is beginning to validate that approach.

Source: Lending Reaches 5-Year High As Alternative Funds Flood In — Bisnow

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