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CBRE survey reveals 56% of lenders plan growth in commercial real estate
Commercial real estate lenders are maintaining a positive outlook despite ongoing global uncertainty, with most planning to increase their loan portfolios in the coming months. This confidence translates into potential opportunities for diverse stakeholders across Australia’s commercial property market, from Melbourne warehouse developers to Brisbane student accommodation investors.
Recent analysis of 34 major lenders reveals sustained institutional confidence, creating a more competitive financing environment that may benefit qualified borrowers. For Victorian businesses seeking commercial premises or investors evaluating property opportunities, understanding these lending trends provides crucial market intelligence for strategic decision-making.
Survey findings reveal strong lender confidence
Key Survey Results:
- 56% of lenders plan to grow commercial real estate exposures
- 0% of lenders intend to decrease their lending activities
- 34 major lenders participated across local banks, international banks, and non-banks
- Steady demand for commercial mortgages reported over the past year
According to the CBRE Lender Sentiment Survey, this unanimous commitment to maintaining or expanding portfolios represents one of the strongest shows of confidence in recent survey history.
What this means for borrowers
This widespread optimism among financial institutions suggests several positive developments for the commercial property market:
Increased financing availability
With more lenders actively seeking growth opportunities, qualified borrowers may find expanded options when seeking commercial property finance. This competitive environment could translate to more favourable terms for well-positioned projects.
Diverse lender participation
The survey’s inclusion of local banks, international institutions, and non-bank lenders indicates broad-based confidence across different types of financial institutions, potentially offering borrowers various financing structures and approaches.
Sector preferences show clear winners and challenges
Lender Preference Rankings:
- Industrial & logistics - Continues to dominate preferences
- Residential property - Maintains strong appeal
- Build-to-rent - Showing increased interest from H2 2024
- Student accommodation - Nearly 25% rank it in top two preferences
- Data centres - Declined from 3rd to 5th place
The industrial and logistics sector continues to dominate investment preferences among lenders, followed closely by residential property. These rankings reflect both current market performance and lenders’ expectations for future sector resilience.
Industrial and logistics: The market leader
Why lenders favour this sector
Industrial properties benefit from several factors driving sustained lender confidence:
- E-commerce growth continues to fuel demand for warehouse and distribution facilities
- Supply chain resilience has become a priority for businesses post-pandemic
- Melbourne’s western corridor and Sydney’s southwestern regions remain hotspots for development
Practical implications for stakeholders
Manufacturing businesses seeking facilities or investors targeting industrial assets may find more competitive financing options available. However, prime locations with strong transport connectivity command the most favourable lending terms.
Residential property shows sustained appeal
The residential sector’s continued strength reflects fundamental housing demand dynamics. For developers and investors, this sustained lender interest may facilitate:
- Apartment development projects in growth corridors
- Townhouse developments in established suburbs
- Mixed-use residential projects combining retail and residential elements
Build-to-rent gains momentum
Build-to-rent properties ranked third in popularity, showing a slight increase in interest compared to the second half of 2024. This emerging asset class offers institutional investors:
Market opportunity indicators
- Rental housing shortages in major capitals create sustained demand
- Professional management appeals to time-poor tenants
- Stable income streams attract institutional capital
Geographic focus areas
Victorian build-to-rent developments near transport hubs and employment centres appear particularly attractive to lenders, especially projects demonstrating strong pre-leasing or management partnerships.
Student accommodation emerges as significant opportunity
Student accommodation has emerged as a significant area of interest, with nearly a quarter of lenders ranking it among their top two preferences. This recognition reflects several market drivers:
Demographic and market factors
- International student recovery following border reopenings
- Purpose-built accommodation shortages near major universities
- Melbourne and Adelaide present strong opportunities given their large student populations
Office sector faces continued headwinds
Meanwhile, lenders maintain a cautious approach toward office real estate, reflecting ongoing concerns about the sector’s performance. The office market continues navigating fundamental shifts in workplace patterns, hybrid working arrangements, and evolving tenant space requirements.
Flight to quality becomes the norm
“Amid caution in the office sector, we are seeing lenders take a considered approach to the sector reflective of flight to quality in the asset class,” said Will Edwards, CBRE debt and structure finance director.
What qualifies as “quality” in today’s market
Lenders are focusing on office properties that demonstrate:
- Premium locations in CBD cores or established business districts
- Modern amenities including end-of-trip facilities, collaborative spaces, and technology infrastructure
- Strong tenant covenants with established businesses on medium to long-term leases
- ESG credentials meeting increasing corporate sustainability requirements
Geographic preferences emerge
Within the office sector, certain locations maintain stronger lender appeal:
- Melbourne CBD A-grade towers with major tenant anchors
- Sydney CBD core properties with transport connectivity
- Brisbane’s commercial precincts benefiting from interstate migration
- Suburban business parks offering parking and flexible spaces
Practical implications for office stakeholders
For property owners
Existing office property owners should prepare for more rigorous refinancing processes. Lenders may require:
- Detailed tenancy schedules showing lease terms and tenant quality
- Capital improvement plans demonstrating asset competitiveness
- Market positioning analysis relative to competing properties
For potential investors
Office sector opportunities may exist for investors who can meet heightened lender requirements and identify assets with strong fundamentals. However, thorough due diligence becomes even more critical in the current environment.
Tenant-driven market evolution
The cautious lending approach reflects broader market realities where tenant preferences drive asset performance. Modern businesses increasingly seek:
- Flexible lease terms accommodating hybrid work arrangements
- Wellness-focused environments supporting employee health and productivity
- Technology-enabled spaces facilitating collaborative and remote work integration
Data centres experience preference shift
Data centres, which were highly favoured in the second half of 2024, have seen a decline in preference, dropping from third to fifth place among lenders’ priorities. This shift indicates changing dynamics in the commercial property landscape and evolving lender perceptions of different asset classes.
Market evolution affects lender views
The movement in data centre preference rankings reflects the rapidly evolving nature of technology infrastructure investments. While the sector remains significant, lenders may be reassessing risk profiles and return expectations based on market developments and competition dynamics.
This preference shift could influence financing availability and terms for data centre projects, though individual proposals with strong fundamentals may still attract competitive interest from specialised lenders.
Broader market implications
The changing preference rankings across different commercial property sectors highlight the importance of staying informed about lender sentiment when planning investments or refinancing activities. Market conditions and preferences can evolve relatively quickly, affecting financing landscapes for different property types.
Interest rate outlook shapes lending decisions
Interest Rate Survey Findings:
- More than 50% of lenders anticipate two additional rate cuts in 2025
- No consensus exists on cash rate levels by June 2026
- Rate uncertainty continues to influence lending strategies and borrowing decisions
Regarding interest rates, more than half of the surveyed lenders anticipate two additional rate cuts during the remainder of 2025. However, there was no consensus among lenders about where the cash rate might stand by June 2026.
How rate expectations influence commercial property decisions
For borrowers considering timing
The expectation of near-term rate reductions may influence financing timing, though individual project fundamentals should remain the primary consideration. Some implications include:
- Current borrowing costs may decrease over the coming months
- Variable rate facilities could become more attractive relative to fixed rates
- Refinancing strategies might benefit from professional timing advice
Planning for rate uncertainty
The lack of consensus about longer-term rates reinforces the importance of robust financial planning that accounts for various scenarios:
- Stress testing loan structures against higher rate environments
- Flexible financing terms that accommodate rate volatility
- Professional guidance in structuring arrangements for different rate scenarios
Market timing considerations
While rate expectations provide context, successful commercial property investments typically depend more on:
- Asset quality and location fundamentals
- Tenant demand and lease structures
- Individual borrower capacity and experience
- Long-term market positioning rather than short-term rate movements
Strong market fundamentals support lending appetite
“The domestic banks sit on strong balance sheets and there has been a significant amount of capital raised in the private credit sector,” said Andrew McCasker, CBRE’s managing director of debt and structured finance. “This is underpinning competitive tension and strong appetite for lending to quality assets and sponsors.”
Banking sector strength provides foundation
The robust financial position of domestic banks creates a solid foundation for continued commercial real estate lending activity. Strong balance sheets typically enable lenders to pursue growth opportunities while maintaining appropriate risk management standards.
This financial strength among traditional lenders, combined with increased private credit sector activity, may create a more competitive environment that could benefit qualified borrowers through improved terms or increased financing options.
Private credit sector expansion
The significant capital raising in the private credit sector adds another dimension to the commercial property financing landscape. This additional source of capital may provide alternative financing options for projects that suit different risk and return profiles.
Competitive environment benefits quality projects
The combination of traditional bank strength and private credit growth appears to be creating competitive tension that favours quality assets and experienced sponsors. This competition may result in more attractive financing terms for well-structured projects with strong fundamentals.
However, this competitive environment also reinforces the importance of presenting high-quality propositions that meet lenders’ standards for assets and sponsor credentials.
Refinancing considerations and market factors
CBRE Research found that asset type and location were among the top three factors influencing lender appetite for refinancing. These findings provide important guidance for property owners planning refinancing activities in the current market environment.
Asset type remains fundamental
The continued importance of asset type in refinancing decisions reflects lenders’ ongoing focus on sectors with strong performance prospects. Properties in preferred sectors may experience more straightforward refinancing processes, while those in challenging sectors might face additional scrutiny.
Location considerations persist
Location remains a critical factor in lending decisions, with prime locations typically receiving more favourable attention from lenders. This emphasis on location quality reinforces traditional commercial real estate investment principles while highlighting the importance of geographic selection.
Strategic refinancing planning
Understanding these key factors can help property owners prepare more effectively for refinancing processes. Early engagement with professional advisors can assist in positioning assets optimally and addressing potential lender concerns proactively.
Implications for Victorian commercial property stakeholders
Despite elevated costs of debt, the overall sentiment among commercial real estate lenders remains positive, with increased appetite for new loans anticipated over the next three months. For Victorian stakeholders, this translates into tangible opportunities across multiple sectors and regions.
Opportunities by stakeholder type
For established investors
- Portfolio expansion in preferred sectors like industrial and build-to-rent
- Refinancing opportunities as competitive tension increases among lenders
- Geographic diversification across Melbourne’s growth corridors and regional centres
For first-time commercial investors
- Entry-level opportunities in emerging sectors like student accommodation
- Joint venture possibilities with experienced developers in preferred asset classes
- Professional guidance becomes even more valuable in navigating lender requirements
For businesses seeking premises
- Owner-occupier financing may benefit from increased lender competition
- Build-to-suit opportunities in industrial and logistics sectors
- Flexible lease-to-own arrangements in some market segments
Geographic focus areas within Victoria
The positive lender sentiment creates opportunities across various Victorian regions:
Melbourne metropolitan opportunities
- Western industrial corridor for logistics and manufacturing facilities
- Inner-city build-to-rent developments near transport and employment hubs
- Student accommodation near major universities in Carlton, Clayton, and Caulfield
Regional Victorian potential
- Geelong industrial expansion linked to port and manufacturing growth
- Ballarat residential development supporting population growth
- Regional student accommodation serving university campuses outside Melbourne
Professional guidance becomes crucial
The complexity of current market conditions, with varying lender preferences across sectors and regions, emphasises the value of professional consultation. Licensed finance brokers can provide:
Market intelligence
- Current lender appetites for specific asset types and locations
- Competitive terms analysis across different financial institutions
- Timing guidance for applications and settlements
Application structuring
- Proposal optimisation to match lender preferences and criteria
- Documentation guidance to streamline assessment processes
- Risk mitigation strategies addressing potential lender concerns
Navigating opportunity in a confident lending environment
The CBRE Lender Sentiment Survey reveals a commercial real estate financing landscape characterised by institutional confidence, sector-specific opportunities, and competitive dynamics that may benefit qualified borrowers. With 56% of major lenders planning portfolio growth and none intending decreases, the foundation exists for increased financing activity across preferred asset classes.
The importance of professional guidance
In an environment where lender preferences vary significantly across sectors and individual institutions maintain distinct criteria, professional advice becomes particularly valuable. Licensed finance brokers can navigate the complexity of current market conditions and help position proposals for optimal consideration.
Whether pursuing industrial development opportunities in Melbourne’s west, student accommodation near university precincts, or build-to-rent projects in transport-connected locations, understanding and aligning with current lender sentiment can significantly influence financing outcomes.
Further questions
What does the CBRE Lender Sentiment Survey mean for commercial property investors?
Which commercial property sectors are lenders most interested in financing?
How might interest rate changes affect commercial property finance decisions?
What should businesses evaluate when seeking commercial property finance in the current market?
Why is professional advice important for commercial real estate financing decisions?
This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.