By John Paul Rothenberg and Anaya Jhaveri
ABA Data Bank
The April 2025 Federal Reserve Senior Loan Officer Opinion Survey, or SLOOS, signals early hints of stabilization in most commercial real estate categories. The survey includes a standard set of quarterly CRE related questions, as well as a special set of CRE questions asked annually.
Each quarter, ABA’s Office of the Chief Economist provides in-depth analysis of the quarterly SLOOS that goes beyond the official summary release from the Fed.
Figure 1
Figure 1 explanation: This chart tracks changes in credit standards for CRE Construction and Land Development loans over time. The stacked bars show the percentage of banks reporting that standards have tightened (red shades) or eased (green shades), with darker colors indicating more significant changes. The blue dotted line represents the net percentage (eased minus tightened), highlighting the overall trend each quarter.
CRE loan demand
While retrenchment of tightening in CRE loan standards in the April survey could be cause for concern, beneath the surface there are signs of stabilization and even a hint of optimism compared to a year ago. Figure 2 shows the reasons cited for changes in CRE loan demand which appear to have found their footing, with most reasons for changes shifting decisively toward less net tightening over the year (i.e., green arrows). Fewer banks are now citing reasons for weaker demand, while more are reporting reasons for stronger demand. The most notable update is from a new question about refinancing activity that shows it is a significant driver of stronger demand (a net stronger value of +15%) while the interest rate level shifted from a very significant reason for weaker demand (-37%) to neutral (0%), signaling that borrowers are no longer holding out for lower interest rates and are willing to lock in today’s deals. At the same time, property development moved from a net negative (-31%) to a neutral factor (-2%), hinting that developers are open to new deals.
Figure 2
Figure 2 explanation: This chart compares the count of banks citing reasons for changes in demand for CRE loans across the last year using a combination of barbell and divergent bar charts. Each arrowed line (“barbell”) connects the net respondent count for April 2024 (black dot) and April 2025 (blue dot), showing shifts in each category. The arrow is colored red for a net negative shift and green for a net positive shift. The categories are sorted from the most net negative category to the most net positive in the latest survey. The shaded bars behind each barbell display the distribution of responses for April 2024 above the arrow, and April 2025 below the arrow: dark red/green indicate “considerable” changes in tightening/easing, while lighter shades show “somewhat.” Neutral responses are not shown.
CRE loan standards
This recovery in demand is mirrored by a broad-based moderation in lending standards, as illustrated in Figure 3, which shows how banks tightened and loosened lending terms for CRE CLD loans over the last year. While not shown, NFNR and multifamily CRE loans have similar patterns. Most banks have shifted away from the aggressive tightening that dominated last year, with key terms such as interest rate spread, which shifted dramatically from -69% to +4%, and maximum loan size now showing net easing. Even traditionally conservative metrics like loan-to value ratio and debt service coverage ratios have stabilized, though they remain net negative, indicating that while risk appetites are improving, a degree of caution persists. The convergence of demand stabilization and more accommodative lending terms suggests a market recalibrating toward disciplined growth, rather than retreat.
Figure 3
A similar pattern emerges when examining the reasons banks cite for changing CRE loan standards, as detailed in Figure 4. The drivers behind last year’s tightening — concerns about vacancies, falling prices, and softening rents — have all moderated substantially, with net tightening shrinking by more than half, from around -80% to -30%. Perhaps most telling, competition from other banks and nonbank lenders has swung from a net tightening factor (-34%) to the leading reason for easing (+23%), underscoring a more normalized and competitive market environment. This collective retreat from risk-driven tightening, coupled with renewed competitive pressures, suggests that banks are not only seeing fewer red flags, but are increasingly eager to compete for new business as the CRE market stabilizes.
Figure 4
Figure 4 explanation: This chart compares the percentage of banks citing reasons for changing standards for CRE loans across the last year using a combination of barbell and divergent bar charts. Each arrowed line (“barbell”) connects the net respondent percent for April 2024 (black dot) and April 2025 (blue dot), showing shifts in each category. The arrow is colored red for a net negative shift and green for a net positive shift. The categories are sorted from the most net negative category to the most net positive in the latest survey. The shaded bars behind each barbell display the distribution of responses for April 2024 above the arrow, and April 2025 below the arrow: dark red/green indicate “considerable” changes in tightening/easing, while lighter shades show “somewhat.” Neutral responses are not shown.
CRE office loans
Highlighting one area of concern, the April 2025 SLOOS also introduced new questions about office properties, and the results were bleak. Figure 5 shows that banks significantly tightened every term for office loans, especially on policies for fundamentals like LTV ratio and debt service ratio. Further, when asked about the reasons for tightening, nearly 70% of banks, and even more among the largest banks, cite fears about declining property prices, falling rents, and rising vacancies as “very important” drivers of their tightening (not shown).
Figure 5
Figure 5 explanation: This chart shows the percentage of banks changing standards for CRE Office loans over the last year. The shaded bars display the distribution of responses for April 2025: dark red/green indicate “considerable” changes in tightening/easing, while lighter shades show “somewhat.” Neutral responses are not shown.
Conclusion
The April 2025 SLOOS suggests that for CRE, while office loans are still a major concern, the broader landscape is showing some modest easing. Banks are being choosy, favoring safer, lower-risk deals, but the overall trend, especially on the demand side, is moving away from avoidance and towards “proceed with caution.” If the economic clouds begin to part, banks seem well-positioned to ramp up lending, with would-be borrowers now lining up for refinancing, new projects, or both.
JP Rothenberg is a VP of banking and policy research at ABA. Anaya Jhaveri is a graduate student at Johns Hopkins University studying applied economics. Discover more in-depth research, dashboards and webinars from the Office of the Chief Economist by exploring ABA’s Economic Research & Insights website.
