2025 Canadian Commercial Real Estate Lenders Report: Survey Reveals
Canadian commercial real estate lenders are positioning themselves for a more dynamic year ahead, despite potential tariff challenges on the horizon. According to the latest CBRE Canadian Real Estate Lenders Report, borrowers can anticipate increased debt availability across most asset classes and metropolitan areas throughout the country.
The comprehensive analysis draws from survey responses of 37 domestic and international lenders who collectively manage over $200 billion in commercial real estate loans. The survey examines activity expectations, lending terms and criteria, and overall lender sentiment and preferences in the current market landscape. This lender sentiment serves as a crucial indicator, as debt availability directly impacts businesses’ ability to secure mortgages for expansion and investors’ capacity to acquire properties.
“Market confidence is surging among lenders across nearly all asset classes and property types, with overall concern levels significantly decreasing everywhere except in the land and condominium sectors,” explains Jessica Harland, Senior Vice President at CBRE. “This widespread optimism signals a transformative shift in the commercial lending landscape for 2025. “For the second consecutive year, nearly half of lenders plan to increase their commercial real estate allocations, with a notable rise in those planning substantial increases.”
Key Insights from the 2025 Canadian Lenders’ Survey
Alberta Markets Gain Significant Momentum
While Toronto, Vancouver, Montreal, and Ottawa remain the preferred markets among lenders, Calgary and Edmonton have experienced the most substantial improvements in market rankings for 2025, climbing 2 and 4 positions year-over-year, respectively. Remarkably, 73% of lenders now actively participate with some level of interest across all Canadian markets.
Retail Sector Experiences Renewed Lender Confidence
A dramatic shift in lender appetite for retail properties is evidenced by the surge in budget increase intentions for 2025. Nearly half of surveyed lenders plan to expand their retail budgets this year—a significant jump compared to the 14% average observed across the previous seven surveys.
Purpose-Built Rental Housing Leads Lender Priorities
Purpose-built rental apartments, particularly Canada Mortgage and Housing Corp. (CMHC)-insured properties, continue to be the most targeted asset class among lenders. Debt availability for purpose-built rentals is projected to see the most substantial growth in 2025, with an average of 73% of lenders planning to increase their budgets for this sector.
Office Market Shows Signs of Recovery
After five consecutive years of decline, lender intentions to increase office budgets have modestly rebounded from 0% last year to 7% of lenders in 2025. Key factors that make office debt attractive include stable, defensive cash flows that can withstand potential vacancy; strong leasing profiles; capable operators; functional physical attributes; and transit-oriented micro-locations.
Market Outlook and Lending Environment
Enhanced Debt Market Liquidity Expected
The survey reveals that 76% of lenders anticipate higher loan origination volumes compared to the previous year, with 24% preparing to deploy 20% or more real estate lending capital in 2025. Meanwhile, 19% expect their loan origination volumes to remain stable year-over-year, while only 6% plan to reduce their origination activity in 2025.
Heightened Competitive Landscape
Lenders are preparing for a more active 2025, with 70% planning to “very actively” or “actively” compete on deals this year. This represents the highest level of intended competitiveness observed in the last three surveys, where only an average of 45% of lenders planned to actively bid on deals in 2023 and 2024.
Condo Development Financing Challenges Persist
While fewer condo development lenders are requiring additional up-front equity compared to last year, it remains the top adjustment that 52% of lenders are implementing in 2025. Additionally, 36% of applicable lenders are requiring greater deposit requirements and shorter payment schedules for condo development loans. Currently, 68% of lenders require 60-79% pre-sale commitments for condo construction financing—likely to present a more significant financing hurdle given the weaker condo sales market.
Key Challenges Facing Lenders
Uncertainty surrounding property valuation underwriting emerges as the primary challenge according to 57% of lenders. This concern, coupled with market fundamentals (also ranked as a major challenge), has prompted lenders to adjust their underwriting assumptions regarding vacancy rates and rent growth in the current softer real estate market. The persistent disconnect between buyer and seller expectations continues to hamper overall investment activity and rounds out the top lending challenges for 2025.
Sustainability Considerations in Real Estate Lending
The survey indicates a noticeable increase in the number of lenders who now believe it will take over five years before sustainability criteria begin to materially impact loan terms. This represents a shift from previous years when more lenders expected sustainability’s impact to materialize within a few years, suggesting a slight retrenchment among some lenders. Nevertheless, sustainability remains an important lending criterion for certain lenders, with 17% reporting that carbon footprints are already influencing loan availability and terms.
“While tariffs aren’t currently registering as a primary concern or significantly altering lending practices, the situation could evolve,” observes Joshua Sonshine, CBRE Senior Vice President. “With increased capital flows, compressing credit spreads, and building momentum in both equity and credit markets, 2025 promises to be an intriguing year—and lenders are poised to facilitate commercial real estate transactions.”
