Recent data from CBRE and Nuveen, along with major capital commitments from public pension funds, suggest that the tide may be turning for commercial real estate. 

After a prolonged period of caution, institutional investors are signaling renewed confidence in commercial real estate (CRE). Recent data from CBRE and Nuveen, along with major capital commitments from public pension funds, suggest that the tide may be turning for commercial real estate. Retail investors may do well to take note of this developing shift.

Increased Lending Activity

According to CBRE’s latest Lending Index,¹ CRE lending activity surged 45% year-over-year in Q2 2025. This marks a significant rebound in credit availability, a key indicator of market health and investor sentiment. Alternative lenders accounted for 34% of loan closures as of Q2 2025, up from 32% from a year ago. Credit funds drove the increase with a 52% increase from the previous year.¹

Lender Composition for Non-Agency Commercial/Multifamily Loans¹

Surge of Incoming Capital

Along with an uptick in lending are capital commitments coming from some of the largest institutional investors in the U.S., most notably:

• CalSTRS has earmarked $1.7 billion for commercial real estate investments.²

• Texas Teachers Retirement System (TRS) has committed $400 million to real estate funds.³ 

• North Carolina Retirement System has committed $350 million to two real estate funds.⁴ 

These announcements reflect a broader trend captured in Nuveen’s 2025 EQuilibrium survey, which found that nearly 40% of global institutional investors plan to increase allocations to commercial real estate over the next two years—a sharp rise from just 25% the year prior.⁵

We believe this growing appetite for CRE is being driven by several converging factors.

• First, the repricing of assets over the past 36 months has created more attractive entry points. 

• Second, investors are seeking alternatives to traditional fixed income as interest rate volatility persists and yield is difficult to find. 

• Third, certain CRE sectors — such as healthcare, seniors housing, multifamily, including build-to-rent, student housing and self-storage — continue to offer compelling long-term fundamentals.

Momentum Building Amid Recovery

While the recovery is still uneven across property types and geographies, we believe the renewed flow of institutional capital is a strong signal that commercial real estate is regaining footing. The fact that large, risk-aware investors are stepping back into the market suggests confidence not only in the asset class but also in the broader economic outlook.

Of course, challenges remain in all sectors and geographies, but that may give rise to opportunities. Non-institutional investors focused on quality and long-term growth may find an opportunity in the current macroeconomic environment—one they tend to miss by entering well after the asset class recovery has gained momentum. Investors should access trusted, well-capitalized sponsors to access these opportunities.

In summary, we see the commercial real estate market showing signs of a steady recovery, with increased lending, rising capital commitments, and improving investor sentiment suggesting that 2025 into 2026 could mark the beginning of a new cycle. Beyond the pursuit of yield, institutions are turning to real estate seeking inflation-hedging benefits and portfolio diversification potential—especially with public markets still experiencing volatility—making it an attractive and potentially stable long-term investment strategy.

Sources:

1 CBRE. Investment & Lending Activity Continue to Improve. Q2 2025 

2 https://irei.com/news/calstrs-commits-1-7b-to-real-estate-funds/

3 https://irei.com/news/texas-trs-commits-400m-to-real-estate-in-august/

4 https://irei.com/news/north-carolina-retirement-commits-350m-to-real-estate/

5 https://www.nuveen.com/global/insights/news/2025/nuveens-fifth-annual-equilibrium-global-institutional-investor-survey?type=us