CRE Outlook for SBA Lenders in a Declining Interest Rate Environment
March 11, 2026
Bob Coleman
Founder & Publisher
CRE Outlook for SBA Lenders in a Declining Interest Rate Environment
Yesterday, I hosted a commercial real estate outlook discussion moderated by Jon Winick of Clark Street Capital titled “Unlocking 2026: Will Lower Rates Reignite CRE?”
About 100 lenders in the room were polled on their outlook for commercial real estate in 2026.
Bullish: 22%
Bearish: 16%
Neutral: 67%
That result tells you a lot about where the market is right now. Most lenders are not euphoric. But they are not pessimistic either. They are waiting.
The panel included:
Tim Mazzetti — SitusAMC
SitusAMC provides advisory, underwriting, asset management, and technology services to institutional real estate lenders and investors.
Charles Krawitz — Alliant Credit Union
Alliant Credit Union is one of the largest U.S. credit unions, providing consumer and commercial banking, including commercial real estate lending.
Brad Salzer — Lindell Capital, LLC
Lindell Capital is a commercial real estate investment and lending firm focused on structured finance and property investments.
Jon Winick — Clark Street Capital
Clark Street Capital is a commercial real estate advisory and brokerage firm specializing in debt placement and loan sales.
The Declining Rate Thesis
Tim Mazzetti framed the core opportunity lender today.
And again, this goes back to my view of being more bullish and less concerned about some stretching in underwriting.
We’ve stabilized interest rates. People have gotten used to 6%, 8% money if you can underwrite a deal.
What is the likelihood that three to five years from now, rates will be higher or lower?
I think they are going to be lower. Most people do as well. So, underwriting a deal, if you know you’ve got a potential takeout because rates are going to be lower than they are today and have been fairly stabilized through 2025, that’s why money is being put out.
Opportunities through 2026 that will positively affect real estate, not the downside.
Deals originated today at 6% to 8% interest rates can produce materially stronger cash flow if refinancing occurs in a lower rate environment in three to five years.
That possibility is one reason capital is starting to flow back into commercial real estate lending.
Private Capital vs Regulated Lenders
Charles Krawitz made an important distinction between private credit and regulated lenders.
Tim, that mentality is a great one for private capital to be taking the marketplace.
But regulated capital should go into commercial real estate lending in anticipation that interest rates will fall, and that will offset any expense increases a property is experiencing or a lack of rent growth. And there’s a real place for that optimism, and it’s with private capital that’s getting paid well.
Private credit funds are willing to price risk around the expectation that rates will decline.
Banks and credit unions have to be more careful. Their underwriting cannot depend on interest rate forecasts.
Why CRE Still Attracts Capital
Despite recent distress headlines, lenders continue to see structural advantages in real estate lending.
Mazzetti noted the fundamental difference between real estate and many other forms of lending.
Commercial real estate is a lower-risk asset because it has collateral backing the loan.
Jon Winick expanded on the structural protection lenders have in CRE.
I don’t know of a single private credit lender that has pulled the line to a commercial real estate fund or pulled back the collateral. Not to say that couldn’t happen, but that’s when you know that there’s real distress.
And obviously, a loan on a fake invoice is a lot different than a loan on a property with the title policy. So the commercial real estate space is inherently less vulnerable to fraud than some other CNI spaces.
A Sector Example: Limited Service Hotels
Brad Salzer pointed to one property type he continues to like.
Limited service hotels.
A limited service hotel focuses on delivering the core hotel product, clean rooms, and basic guest amenities without extensive services like restaurants, room service, or large event facilities.
Salzer explained why the segment works.
I still like limited service. That’s what people need, and that’s the lower cost provider. Limited services ADRs (average daily room rates) aren’t like they used to be. They’re still good now, depending on the market.
But as you know, Bob, it’s all about the flag, and the flag’s going to be the driver of that occupancy ultimately.
Takeaway
Commercial real estate lending is entering a new phase.
Rates stabilized in 2025. The market is now looking forward.
If rates decline over the next three to five years, loans originated today at higher rates could become stronger credits as refinancing reduces debt service.
Private credit is already leaning into that thesis.
Banks will remain more disciplined.
But for SBA lenders focused on smaller commercial real estate transactions, especially the $5 million to $10 million range, the opportunity set heading into 2026 may be larger than many realize.