A new NAIOP Research Foundation report based on data from Altus Group’s fourth quarter 2025 survey of commercial real estate (CRE) borrowers and lenders reveals mixed signals about the current state of the debt market.

Benchmark interest rates fell further across the curve, but fixed-rate spreads widened modestly, resulting in flat to slightly higher all-in costs for fixed-rate loans. Floating-rate borrowers, however, continued to benefit from a decline in the Secured Overnight Financing Rate (SOFR), extending a trend that began when the Federal Reserve started cutting rates in late 2024. Survey results also indicate continued spread discipline among lenders and meaningful rate relief for borrowers, particularly those seeking shorter term and floating-rate financing.

More key takeaways:

• Fixed-rate products appear to be gaining traction, as their share of total surveyed quotes continued to rise through 2025 and accounted for 52% of all quotes in the final quarter, an increase that was concentrated in senior structures.
• The mix of property types used as collateral mostly held steady, with one notable shift: Office quoting activity picked up. Office’s share of total quotes rose to 22% from 18% in the third quarter, a jump of 4 percentage points driven entirely by non-trophy collateral.
• Declining benchmark rates and narrower yield spreads have lowered all-in interest rates over the last year. Interest rates have fallen for every type of loan except for higher-leveraged fixed-rate construction loans.
• Multifamily and industrial assets continue to command the tightest spreads. Both sectors benefit from strong tenant demand and limited new supply, giving lenders confidence in cash flow stability. Meanwhile, the office market continues to show a quality divide, highlighting the persistent flight to quality in office lending, although the fact that lenders are giving and borrowers are receiving quotes is a positive sign.
• Retail was one of the quarter’s clear winners on spread compression. Fixed-rate short-term senior spreads fell 44 bps for lower-leverage loans and 64 bps for higher-leverage loans since the third quarter, while long-term fixed-rate products were mixed, tightening for higher-leverage loans and widening for lower-leverage loans.
• Construction spreads are the widest across all collateral types; quarter over quarter, construction lending showed mixed movement. Lenders are demanding a premium for development risk, particularly on subordinate capital.

Looking ahead, borrowers are finding relief through spread compression and the falling SOFR, but headwinds remain, according to the report. Treasury yields have ticked higher in early 2026, which could offset recent spread gains and keep all-in costs elevated. For borrowers to see further rate improvement, spreads would need to compress further still. Meanwhile, the shifting mix of quoted products and collateral types suggests lenders are recalibrating where they want exposure as the cycle matures.

“These data show a welcome stabilization in debt financing costs as we move further into 2026,” said Marc Selvitelli, CAE, president and CEO of NAIOP. “Lenders and borrowers are regaining confidence as market conditions improve, even as they remain disciplined in how and where they deploy capital.”

The report is authored by Omar Eltorai, senior director of research, Altus Group, a leading provider of CRE intelligence. This report will be released quarterly throughout 2026, and includes data on quoted interest rates by property type, loan type, maturity and loan-to-value ratio, including for both senior debt and mezzanine loans.

The full report is available exclusively to NAIOP members; media can request access by emailing Brielle Scott, NAIOP director of marketing and communications, at scott@naiop.org.

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About the NAIOP Research Foundation The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation’s core purpose is to provide information about how real properties impact and benefit communities throughout North America. For more information, visit naiop.org/researchfoundation.

About NAIOP

NAIOP, the Commercial Real Estate Development Association is the leading organization for developers, owners, investors and related professionals in office, industrial, retail, and mixed-use real estate. NAIOP provides unparalleled industry networking and education and advocates for effective legislation on behalf of our members. NAIOP advances responsible, sustainable development that creates jobs and benefits the communities in which our members work and live. For more information, visit naiop.org.

About Altus Group

Altus Group is a leading provider of commercial real estate (“CRE”) intelligence, anchored by ARGUS – the industry’s go-to software for valuation and performance analytics. For more than two decades, Altus has played a vital role in empowering CRE professionals with the analytics and trusted advice they need to make high-stakes decisions with confidence. The world’s CRE leaders rely on our market-leading solutions and expertise to drive performance and manage risk. Our people around the world are making a lasting impact on an industry undergoing unprecedented change – helping shape the cities where we live, work, and build thriving communities. For more information about Altus (TSX: AIF) please visit www.altusgroup.com.

NAIOP Contact:

Brielle Scott, NAIOP director of marketing and communications 703-904-7100, ext. 169 scott@naiop.org