At long last the commercial real estate sector is coming out of its post-pandemic malaise. Commercial lenders at community financial institutions need to ask: Am I prepared to handle the coming period of volume growth with speed, safety, and confidence?

The first half of 2026 signaled several bright signs for a continued recovery. These included a first quarter year-over-year increase of 52% in commercial/multifamily mortgage originations. This was after the Mortgage Bankers Association (MBA) forecasted that total commercial mortgage originations would hit $805.5 billion in 2026, up 27% from its 2025 estimate.

These are encouraging signs, particularly for community and regional institutions looking for quality lending opportunities. But a busier CRE market brings its own challenges. As we transition into the second half of 2026, lenders must be prepared to balance increased growth opportunities with prudent caution around credit and property-specific risk.

Here are some of the key trends in CRE we’re watching at ORMS, and what they mean for commercial lenders.

Trend #1: More deals equal more need for speed

For community and regional lenders competing against larger institutions and nonbank capital sources, speed and responsiveness are important competitive differentiators.

But faster shouldn’t mean less thorough. Higher CRE transaction volume means greater demand for lender scrutiny, including in underwriting, appraisal review, and environmental due diligence. Specifically, cutting corners in environmental due diligence just to check a box can expose you to potential risks that aren’t apparent from the property’s current use.

Community FIs seem to be getting the message. In its April Senior Loan Officer Opinion Survey (SLOOS), the Federal Reserve found that large banks had eased standards across all three CRE categories, while smaller banks reported tightening construction-and-development standards and, to a lesser degree, multifamily standards.

Take the time now to assess whether your environmental due diligence processes can scale with increasing volume without creating bottlenecks or compromising quality.

Trend #2: Despite improving credit, risk hasn’t disappeared

On the positive side, commercial mortgage performance improved in the second quarter, with delinquency rates falling across most major property types and capital sources. Office and lodging remained the most challenged sectors.

This continues a trend from 2025, which saw low aggregate bank CRE delinquency and charge-off ratios. However, CRE concentrations and delinquency levels vary significantly across institutional asset sizes, while higher borrowing costs, operating expenses, and vacancy levels continue to challenge some borrowers’ ability to refinance and repay.

Bottom line, it’s not time to relax your approach. In an increasingly bifurcated market, broad property categories and national averages can conceal significant asset-level differences, making property-by-property underwriting and environmental risk assessment particularly important.

Trend #3: The maturity wall is getting smaller—but it’s far from gone

One continuing area of risk for existing CRE portfolios is the “maturity wall” issue of the past few years. The MBA estimates that $875 billion—17% of the $5 trillion in outstanding commercial mortgages—will mature during 2026. Although that’s down 9% from the $957 billion scheduled to mature in 2025, it still represents a substantial amount of debt that must be refinanced, extended, modified, or canceled this year.

Maturities also vary significantly by property type: 30% of hotel/motel mortgage balances, 23% of industrial and 17% of office balances are scheduled to mature this year.

The challenge is, many of these refinancing borrowers are facing much higher debt-service costs than they did when they first took on the debt just before or during the pandemic. Lenders may need to extend, modify, or workout loans against challenged properties. In the worst-case scenario, it may mean pursuing foreclosure or liquidation proceedings when refinancing isn’t an option.

Environmental due diligence isn’t only an origination consideration. Changing collateral circumstances, foreclosure, and taking title can create different environmental risk management questions that lenders should address before acting.

Trend #4: Redevelopment and adaptive reuse create new opportunities, and new due diligence questions

As the CRE market resets, new redevelopment and reuse projects are emerging.

Older office buildings, obsolete retail properties, and other underperforming assets are increasingly candidates for redevelopment, repositioning, or conversion to alternative uses.

Washington, D.C., for example, has become a leading office-to-residential conversion market, with CBRE reporting that conversions and redevelopment of vacant office properties are helping remove underutilized inventory and stabilize the local office market.

For community and regional lenders, these projects can represent attractive lending opportunities, but the future use of the property doesn’t erase its past.

Potential environmental considerations include:

• historical uses of the property and surrounding parcels;
• legacy contamination;
• underground storage tanks;
• hazardous building materials associated with older structures;
• environmental issues uncovered during demolition or redevelopment; and
• whether planned changes in use warrant additional investigation.

Before lending against these types of projects, make sure you’re gathering a complete and unbiased history of past use.

Deep dive: a focus on office, retail, and multifamily

High-quality office properties seem like a good bet

After years of declining valuations, the office sector is finally beginning to stabilize. In the second quarter of 2026 U.S. net absorption nearly doubled quarter over quarter to 12.6 million square feet, the ninth consecutive positive quarter. Vacancy fell 30 basis points to 18.3%—the largest quarterly decline since 2015—while prime-office vacancy fell to 12.3%.

This doesn’t mean lenders can take their eye off the ball. High-quality space is outperforming older and obsolete inventory. Focus on factors like location, building quality, tenancy, and future viability in your underwriting for the best chances of success.

Retail shows quiet resiliency

Retail continues to demonstrate surprisingly strong fundamentals. In the second quarter, availability held at just 4.9%, while average asking rents increased 2.4% year over year. Limited new construction is supporting existing properties, although performance varies by format and location.

The best deal opportunities can be found around well-located neighborhood and grocery-anchored properties, while older or obsolete retail may become redevelopment candidates.

Multifamily appears set for the long-term, despite uneven performance

Nationally, multifamily fundamentals remain relatively healthy, but high-supply markets—particularly in parts of the Sun Belt and Mountain West—continue to contend with new supply and pressure on asking rents. CBRE expects operators to prioritize occupancy over rent growth through much of 2026.

For lenders, local supply, occupancy, and borrower assumptions matter more than national multifamily averages.

Meeting opportunity with disciplined execution

The second half of 2026 looks more promising for CRE lending than at any time since the pandemic. More transactions, stronger originations, and improving fundamentals could create meaningful opportunities for community and regional financial institutions.

But the recovery isn’t uniform. Legacy loans still need to be resolved, challenged properties are being repurposed, and performance increasingly varies from one property type and market to the next.

As activity accelerates, lenders need environmental risk-management processes that can keep pace—providing thorough, property-specific due diligence without throwing up unnecessary roadblocks to closing the deal.

As deal volumes increase, ORMS stands ready to support your environmental due diligence as your experienced outsourced risk management partner. Reach out to us today at info@orms.com.