Monday Market Moves | Week of February 16, 2026

Welcome to Monday Market Moves, the weekly series from Essex Capital Markets briefing you on Chicago commercial real estate capital markets. We cover key trends in CRE debt, refinancing, and capital structures to help investors and owners navigate today’s financing environment.

This Week:Underwriting Has Changed — What Lenders Are Actually Focusing On

As Chicago’s commercial real estate market continues to adjust to higher-for-longer rates and tighter credit conditions, underwriting standards have evolved in ways that are not always obvious from term sheets alone. While many lenders describe their approach as “conservative,” the definition of conservative has shifted materially over the past 12 to 18 months.

At Essex Capital Markets, recent executions and lender conversations point to a clear recalibration in how deals are evaluated, particularly for refinances and mid-market assets. Understanding these underwriting shifts is becoming just as important as understanding rate movement.

What we’re seeing:

• Lenders are prioritizing in-place performance over projections. Trended rent growth assumptions have largely disappeared, and underwriting is increasingly anchored to current, verifiable cash flow rather than future upside.

• Debt service coverage has moved to the front of the underwriting conversation. Many lenders are sizing loans off DSCR first, with leverage becoming a secondary constraint rather than the starting point.

• Expense scrutiny has intensified, with particular focus on taxes, insurance, and payroll. Lenders are less willing to accept historical averages and are underwriting to forward-looking expense realities.

• Liquidity and sponsorship strength are carrying more weight. Sponsor balance sheets, post-closing liquidity, and demonstrated ability to support the asset are influencing structure and execution certainty.

• Structure flexibility is being used selectively. While leverage remains conservative, lenders are sometimes offering longer amortization, partial interest-only, or recourse adjustments to support cash flow and execution, in order to win transactions they want.

Conclusion

Today’s underwriting environment is not just tighter — it is more intentional. For Chicago owners navigating refinances or capital restructures in 2026, success increasingly depends on aligning deal narratives with how lenders are actually underwriting today, not how they underwrote in prior cycles.

Early preparation, transparent financials, and realistic assumptions remain critical to achieving competitive outcomes in a more disciplined lending landscape.

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