Clearwater's Midyear 2025 Insight & Outlook

As we enter the back half of 2025, one thing is clear: commercial real estate isn’t frozen. It’s realigning. Traditional lenders remain risk-off. Sponsors are adjusting to this new reality by rebuilding capital stacks and transacting with precision.

Quick Stats
→ CRE loan growth slowed to its lowest rate since 2013¹
→ Banks now represent just 31% of CRE lending, down from 44% in 2022³
→ $4.4B in private short-term CRE debt originated in Q1 2025 alone⁴
→ $950B+ in CRE mortgages set to mature in 2025⁶

Liquidity Is Scarce. Execution Is Not.
Commercial real estate credit markets have entered a new regime. CRE loan growth slowed to its lowest pace since 2013¹. The Fed’s April 2025 Loan Officer Survey confirmed what sponsors already know: tighter credit, lower LTVs, and heightened DSCR hurdles. Banks are risk-off and unlikely to return soon.

In 2024, banks accounted for just 31% of CRE lending, down from 44% in 2022³. Private capital is stepping in. In Q1 2025, private lenders originated $4.4B in short-term CRE debt⁴. That shift has powered CLEARWATER’s exponential growth. Our current pipeline exceeds $1.5B, driven by demand for cost-effective, flexible capital that closes.

Sponsors Are Moving. The Market Is Catching Up.
ULI forecasts $469B in CRE deal volume in 2025, up from $437B⁵. But the more important trend is beneath the surface—sponsors are reactivating. Projects shelved in 2022 and 2023 are coming back online. Capital stacks are being rebuilt. The market is adjusting to a new rate environment, not waiting for clarity.

At CLEARWATER, we’re meeting the moment with institutional capital structured for this market, not the one we left behind. Our $1B+ pipeline reflects growing demand for non-dilutive, nonrecourse execution across three core areas:

1. New Construction
We’re financing fully entitled, institutional-grade developments with C-PACE sitting behind the senior, bringing cost of capital down while preserving sponsor equity.

2. Completion Capital
Projects stalled midstream are restarting. As senior lenders cap exposure or retrade terms, we’re stepping in with passive capital to help them get back online.

3. Recapitalizations
With approximately $950 billion in CRE debt maturing this year, many sponsors are utilizing C-PACE to refinance maturing loans, replenish reserves, and extend duration, without introducing dilutive capital.

Sponsors aren’t overleveraged. They’re underequipped, caught between inflation and illiquidity. We underwrite into that gap, not around it.

The Recap Cycle Is Here
Roughly $950B in CRE mortgages mature in 2025⁶. Many sponsors are facing shortfalls, not due to poor asset performance, but rather from pricing resets, tighter advance rates, and slow absorption.

Senior lenders are engaging, too. In many deals, we’re actively reducing senior last-dollar exposure, freeing capital to pursue higher-spread opportunities. It’s a better execution for borrower and lender.

Why CLEARWATER Wins: Alignment + Real-Time Structuring
We’re not a product shop. We’re real estate investors with a structured credit lens.

CLEARWATER was built on the belief that C-PACE is most effective when aligned with the capital stack. That requires more than just structuring mechanics; it demands fluency in capital markets. Through our affiliation with AXCS Capital, we have access to real-time pricing and structuring across senior debt, subordinate debt, and equity investments.

H2 2025: Structure Will Outperform Optimism
We expect the second half of 2025 to be driven by:

1. Ongoing repricing of risk and valuations

2. Growing dependence on private capital for execution

3. Sponsor demand for flexible, non-dilutive capital structures

C-PACE is not a cure-all, but it’s a critical solution. With 30-year amortization, non-recourse treatment, fixed-rate terms, and flexible repayment options, it’s one of the most versatile tools available for sponsors navigating a dislocated market.

CLEARWATER is built to lead in this environment by underwriting selectively, structuring precisely, and solving for capital gaps that stall development.

In today’s market, capital doesn’t need to chase risk. It needs to deliver clarity. That’s what we’re doing, one transaction at a time.

Let’s talk.
📩 [email protected]
🌐 www.c-pace.com

Sources
¹ Federal Reserve Bank of St. Louis, FRED – Total CRE Loan Growth, Q4 2024
² Federal Reserve, April 2025 Senior Loan Officer Opinion Survey
³ MSCI Real Assets, “CRE Lending Trends and Bank Market Share,” 2024
⁴ Commercial Observer, “Private Lenders Fill the Void,” Q1 2025
⁵ ULI Real Estate Economic Forecast, Spring 2025
⁶ Mortgage Bankers Association, 2025 Maturity Outlook