If you follow commercial real estate through headlines, you have probably absorbed two conflicting ideas at once: that lending has dried up, and that the whole thing is quietly fine. The data behind our August Economic Outlook, prepared with economist Dr. John E. Silvia, supports neither. What it shows is a market where the depository channel and the securitized channel have separated, and where the difference between metros now matters more than the national average.
Here is what that looks like in the numbers.
Lending normalized rather than retrenched
Commercial real estate loan growth is running near 3%, roughly in line with real final sales to private domestic purchasers. That convergence is the point. Bank balances are still expanding, but at a pace that tracks underlying economic activity rather than the distortions of the shutdown and the stimulus that followed.
This is the part most often misread. Slower growth after 2024 is not the same as a credit crunch. Growth near the rate of real final demand is what a functioning lending market looks like. Balances that grow at 13% and balances that shrink are both signs of a market under stress. Three percent is not.
Standards have turned, and the direction matters more than the level
The net share of banks reporting tighter standards on nonfarm nonresidential loans has fallen from about 42% in early 2024 to slightly below zero by the first quarter of 2026. A small net share of banks is now easing.
That is not loose credit by historical standards. It is a reversal, and reversals tend to show up in deal flow before they show up in spreads. One exception is worth naming: foreign banks have not followed the same path, and their pullback weighs on gateway-market office far more than on the regional markets we cover.
The number that gets quoted and the number that matters
Bank-held CRE delinquencies are running near 1.6%. That is in line with overall bank delinquency rates and below consumer loans. It is a reassuring figure, and it is the one that tends to get quoted.
In the capital markets channel, the picture is different. CMBS delinquencies are above 5%, and the broader commercial mortgage market reached 4.02% in the first quarter of 2026, up from 3.86% the quarter before.
Depository credit is holding. Securitized credit is not. The benign bank numbers should not be read as a benign market, because they describe a different set of loans held by a different set of lenders under different workout incentives. A bank can extend and restructure a loan on its own balance sheet. A servicer working inside a CMBS trust has far less room to do the same thing.
Bank size changes the picture again
The aggregate bank number hides a real split. CRE delinquencies are concentrated at the largest institutions, the ones carrying the biggest downtown office exposures. That rate peaked near 2.0% in late 2024 and has since eased to about 1.8%.
Banks outside the top 100 are running near 1.25%, and their rate is still rising.
Note the asymmetry, because it is easy to get backwards. Smaller banks carry the higher CRE concentration relative to capital. Larger banks carry the higher realized delinquency. The large institutions appear to have worked through the bulk of their stress. The smaller ones are still in the rising phase of theirs.
For clients working with community and regional lenders, this is the useful takeaway: that credit has held up better than national headlines imply, even though the trend line is still moving the wrong way.
Rates matter, but not where people assume
Banks lend on their expectations for growth. Rates are secondary. The ten-year Treasury sets the discount rate for property values and the hurdle for refinancing, but it does not determine loan volume, and the historical relationship between the two is loose enough to have changed sign across cycles.
Where the ten-year does bind in 2026 is the maturity wall. Roughly $875 billion of commercial real estate and multifamily debt comes due this year. It is the ten-year at refinancing, not at origination, that determines the size of the equity gap on each of those loans. That reframes the problem: for most of this year’s maturities, the binding constraint is not default risk but the amount of fresh equity a borrower has to write a check for.
It also means relief requires lower long rates. Cuts at the front end of the curve, on their own, do not fix the refinancing math.
Metros are pulling apart
Labor markets are the transmission channel between the macro economy and CRE credit, which is why we track them alongside delinquencies.
Since early 2023, unemployment in Houston, DFW and Austin has risen only two to three tenths of a point. Over the same period the national CRE delinquency rate rose about eight tenths. Texas labor markets have absorbed this cycle better than the national credit picture would suggest.
Elsewhere the movement is larger. Tampa is up 1.9 points, Albuquerque 1.4 and Oklahoma City 1.1. Santa Fe is up 0.9. El Paso has been the steadier case, with unemployment essentially flat at about 4.4%.
The ranking here matters more than the magnitudes. Where labor has moved this far ahead of credit, the gap usually closes through delinquencies catching up rather than through labor recovering. In Tampa, Albuquerque and Oklahoma City, absorption, rent growth and exit cap assumptions deserve the closest scrutiny, and income assumptions should be stress tested against the local labor data rather than the national credit series.
What this means for valuation work
Pulling it together:
Lending: CRE loan growth holds near 3% through 2027. No credit crunch in our markets.
Standards: easing continues absent a growth shock. Availability improves at the margin, not sharply.
Bank credit: delinquencies stay near 1.6%. Any drift higher is gradual, not cliff-like.
Securitized credit: CMBS stress above 5% persists, and the gap between bank and CMBS performance should widen.
Maturities: roughly $875 billion comes due in 2026. Equity gaps, not defaults, are the binding constraint.
Rates: at today’s ten-year, refinancing math stays tight.
Metros: Texas holds steady while Tampa, Albuquerque and Oklahoma City soften. Watch those three for credit follow through.
None of this resolves into a single national story, which is the practical conclusion. A national delinquency rate cannot tell you what a specific asset in a specific submarket is worth. Translating this kind of macroeconomic context into a defensible value conclusion takes regional employment analysis tied to local conditions, sector-level insight across property types, and market-specific research grounded in observed evidence rather than broad assumptions.
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We welcome the opportunity to discuss what these trends mean for your portfolio, your assignment, or your market. Schedule a virtual or in-person briefing with the TVG team and Dr. Silvia.
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The economic views expressed in this outlook are those of Dr. John E. Silvia and Dynamic Economic Strategy. They are general in nature, do not constitute a forecast adopted by Teel Valuation Group, and are not relied upon in any specific TVG valuation assignment. Each TVG appraisal reflects conditions as of its stated effective date.