Despite a cooling in lending activity, total debt tied to commercial real estate continues to climb, edging closer to the $5 trillion mark.

Debt Growth Persists:

According to the Mortgage Bankers Association (MBA), commercial and multifamily mortgage debt outstanding increased by $46.8 billion in the first quarter of 2025, bringing the total to a record $4.81 trillion. Multifamily debt alone reached $2.16 trillion, a 0.9% uptick from the previous quarter.

Lending Slows, but Debt Levels Rise:

While new loan originations remain subdued, overall debt balances are still growing. MBA attributes this to a combination of longer loan terms keeping existing debt on the books and persistent investor appetite for income-producing properties, particularly in sectors like multifamily.

Who’s Holding the Paper:

Four main investor groups account for the bulk of this debt:

• Commercial banks and thrifts: $1.8 trillion (38%)
• Agencies/GSEs and mortgage-backed securities: $1.07 trillion (22%)
• Life insurance companies: $752 billion (16%)
• CMBS/CDO/ABS issuers: $642 billion (13%)

Multifamily Market Breakdown:

Within the multifamily sector, agency and GSE portfolios remain the largest lenders, holding about half of the outstanding debt. Banks follow with 30%, while life insurers account for 11%, state and local governments 4%, and securitized products 3%.

➝ Key Insight:

Even in a period of restrained lending, commercial real estate debt continues to accumulate. Investor demand for stable, income-generating assets—especially in multifamily—remains firm, and with limited deleveraging activity, the overall debt market shows no signs of slowing.