The Federal Reserve’s newly released Senior Loan Officer Opinion Survey for April reinforces our view that the CRE lending environment is stable and, in fact, selectively easing, even amid a more volatile macro backdrop. While the headline result points to largely unchanged lending standards, the underlying detail tells a more constructive story. Large banks eased lending standards across all three CRE loan categories and reported significantly stronger demand for core commercial and multifamily loans. Smaller domestic and foreign banks, by contrast, moved in the opposite direction—tightening standards and reporting softer demand. Bottom line, debt capital continues to flow into CRE, especially through the largest channels first—suggesting that institutional quality borrowers remain engaged. Combined with a broad-based rise in major private CRE indices, REIT valuations exceeding prior cycle peaks and accelerating transaction volumes support our view that the CRE recovery remains intact.

The survey showed that over the first quarter, banks reported largely unchanged lending standards across all three major CRE loan categories: construction & land development (CLD), core commercial, and multifamily. On the demand side, a moderate net share of banks reported weaker demand for CLD loans, while demand for core commercial and multifamily loans was essentially flat.

The headline "unchanged" masks meaningful divergence when you break responses down by bank size, and the split is telling.

• Lending standards: Large banks eased standards across all three CRE loan categories, while smaller domestic banks moved in the opposite direction—tightening on CLD and multifamily loans while holding core commercial steady. Foreign banks also reported modest tightening across the board. The headline “unchanged” result is effectively the average of easing at large banks and tightening elsewhere./span>
• Loan demand: Large banks reported significantly stronger demand for core commercial and multifamily loans, a notable signal in our view, while reporting moderately weaker CLD demand. Smaller banks saw softer demand across CLD and multifamily, with core commercial flat. Foreign banks, interestingly, reported modestly stronger demand across the board./span>

Entering 2026, we expected CRE lending standards to begin loosening, and while the headline suggests a holding pattern, context matters. The survey was conducted between March 23 and April 3, a period marked by heightened geopolitical and trade policy uncertainty. Against that backdrop, the absence of broad-based tightening is a constructive signal. More importantly, large banks are actively loosening standards and reporting meaningfully stronger loan demand. That combination suggests that larger, institutional-quality borrowers remain engaged despite macro volatility.

As part of its annual CRE lending policy review, the Fed asked banks about changes to CRE lending terms and demand over the past 12 months. This year’s responses were broadly constructive: 

• The most frequently cited driver was more aggressive competition from other banks and nonbank lenders. A significant to moderate net share of banks reported higher maximum loan sizes, narrower spreads over the bank's cost of funds, and longer interest only payment periods. A modest net share also reported lower debt service coverage ratios for CLD and multifamily loans. All other terms surveyed were left essentially unchanged. 
• Banks pointed to increased acquisition and development activity, refinancing of maturing loans, a declining interest rate environment, and a more favorable, or less uncertain, outlook for rental demand. 

Notably, the gap between responses for large and other banks tightened relative to last year, consistent with the view that small and regional banks have become increasingly competitive in CRE lending. Indeed, Real Capital Analytics reports that regional and local bank share of total CRE lending rose to 19% of total CRE lending in 2025, up from 17% in 2024 and above the 2015–2019 average of 17%. 

The April SLOOS suggests that CRE credit conditions are stable, with early signs of selective easing led by large banks. While uncertainty remains elevated, institutional lending channels remain open as well as liquid and borrower engagement is improving. If these trends persist, they should continue to support the recovery in CRE valuations as the year progresses.