New lending for UK commercial real estate has hit the highest level in a decade, according to Bayes Business School’s latest report, with £52.7bn loans advanced last year.

On first sight, this finding – from what has become the definitive survey of the UK CRE lending market – may seem surprising, given the market for new build commercial property is undeniably sluggish. A deeper dive into the report, however, reveals that around 60% of lending involved refinancing.

Another interesting trend is the changing make-up of lenders. UK banks reduced their exposure to commercial property by 40% over the last year, and now account for just 36% of the market.

In contrast, debt funds more than doubled their market share, rising from 12% to 28%. Alternative lenders, including insurance companies, now account for 45% of outstanding commercial mortgages and are on track to break the 50% barrier in the next few years. Institutions, family offices and specialised credit funds are picking up the void left by the banks.

The increase in new entrants means borrowing costs are becoming more competitive. According to Bayes, British banks and debt funds cut rates for prime office space by 45bps and 30bps respectively. And it’s not just rates – competition on loan-to-value (LTV) levels and fees has also intensified. I’ve seen first-hand how lenders quickly become flavour of the month when they reduce their pricing.

So what does all this mean for developers and investors looking for funding? The good news is there is a weight of money out there, a wider choice of lenders, interest rates are less volatile and borrowing costs are competitive.

The Bayes report indicated that development financing is also emerging as a key growth area for lenders, accounting for 16% of new lending and 19% of total outstanding CRE debt. This is particularly encouraging, as the ability to access funding is one of the reasons so many commercial real estate projects have remained on the drawing board.

There are some caveats, however. As you would expect, not all assets are equal: Bayes reports that logistics, residential and student housing are most attractive for lenders, with £20m+ lot sizes and sustainable properties hitting their sweet spot.

Published in May, 2026, the Bayes report is based on data from 2025. A more recent survey – the RICS UK Commercial Property Monitor Q1 2026 – paints a different picture. The report

shows the weakest reading for credit conditions since Q3 2023, albeit that this is based on market sentiment, rather than data.

The RICS report also shows that twelve-month capital valuation expectations have weakened. This could be a concern for property holders looking to refinance but may favour acquisitive investors.

My own reading of the market is that there is definitely an improved appetite to lend. Access to finance has been one of the reasons why so many development projects have stalled. Let’s hope that removing a major obstacle will encourage more starts on site and greater liquidity in the investment market.