Commercial real estate (CRE) is once again navigating choppy waters. But unlike the early 2020s, this time, it’s not a health crisis—it’s global tariffs and international trade tensions that are reshaping the commercial real estate lending landscape.
New data from Trepp suggests that credit spreads across CRE sectors are widening in a way that echoes the volatility of the COVID-19 era. While we’re not yet seeing the same dramatic spikes, the trajectory is familiar—and potentially just as impactful.
Looking Back: How 2020 Set the Stage for 2025
In March 2020, as the pandemic triggered global uncertainty, credit spreads for commercial real estate surged. Within weeks:
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Multifamily spreads jumped to 315 basis points
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Office climbed to 328
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Retail topped out over 333
These rapid increases reflected widespread market fear and a swift reassessment of risk.
Fast-forward to April 2025, and we’re seeing early signs of that pattern returning.
Between March 21 and April 11, 2025, credit spreads widened across every major CRE asset class:
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Multifamily: 150.2 → 159.3 basis points
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Industrial: 152.8 → 161.9
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Retail: 165.4 → 177
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Office: 203.8 → 213.8
Some lenders made small adjustments; others widened spreads by up to 35 basis points. This range of responses suggests we could enter a new repricing cycle driven by global uncertainty.
What’s Fueling the Spread Widening in 2025?
One major factor this time around is tariffs.
Ongoing trade disputes, import taxes, and retaliatory threats from key economies like China and the EU are driving up the cost of goods. Big-box retailers—Target, Shein, and others—have openly stated they’re passing these costs on to consumers.
In the CRE sector, this impacts:
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Construction costs
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Development timelines
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Insurance premiums
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Underwriting assumptions
When material prices rise and volatility increases, lenders become more cautious, tightening credit, raising borrowing costs, and adding risk premiums.
This is all playing out against the backdrop of persistent inflation. The Federal Reserve was expected to hold or lower interest rates in 2025, but those expectations may shift. If the Fed tightens again, expect another wave of borrowing cost increases across commercial real estate.
🧠 Quick Answer: Why Are CRE Credit Spreads Rising in 2025?
A: Rising tariffs, global trade tensions, and stubborn inflation are leading to higher construction and borrowing costs. Lenders are reacting by widening spreads and tightening underwriting standards.
What This Means for Developers, Borrowers, and CRE Investors
The widening spreads are already creating headwinds for real estate developers and borrowers:
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📈 Loan costs are rising, which can threaten deal viability
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🔍 Underwriting is becoming more selective and conservative
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🕓 Funding timelines may slow down
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💰 Equity requirements may increase, especially for new or speculative projects
At JBN Capital LLC, we’re seeing these changes firsthand. As a lender focused on large commercial real estate and business loans, we know how fast market conditions can shift.
That’s why we don’t offer cookie-cutter solutions.
We tailor every loan to the borrower’s structure, timing, and unique needs. Whether it’s for expansion, new equipment, working capital, or real estate acquisition, our approach is:
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Collaborative
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Flexible
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Designed for agility in changing markets
In times like these, that kind of customization isn’t just helpful—it’s essential.
What’s Next for CRE Lending?
There’s still reason for cautious optimism.
Credit markets could settle if global trade negotiations stabilize and tariff escalation slows. The commercial real estate industry has proven its resilience before, and it can again.
But in the meantime, success will come from staying informed, acting quickly, and structuring deals to withstand short-term turbulence.
Final Thoughts: Planning for CRE in a Volatile World
What we’re seeing now may not feel as dramatic as the events 2020, but it’s rooted in the same fundamental cause: uncertainty. When uncertainty rises, credit markets react—often swiftly.
If you’re active in commercial real estate—whether as a lender, borrower, developer, or investor—this is a smart time to:
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Reevaluate assumptions
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Monitor spread movements
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Work with partners who can move with the market
Let’s keep an eye on the numbers—and more importantly, on the world events that are driving them.
Thanks for reading. Are you seeing lenders tighten in your deals, too?
I’d love to hear your perspective. Feel free to contact me to see how I can help you with your commercial real estate loan.
Joseph M. Navon
Managing Partner, JBN Capital LLC
Specialized Commercial Real Estate & Business Lending Solutions – Tailored for Today’s Market
