Monday Market Moves | Week of November 24, 2025

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, borrowers, and lenders navigate today’s CRE financing market.

This Week: Year-End Lender Behavior – Why Underwriting Just Tightened Again

As lenders work to close out their 2025 books, underwriting criteria have tightened across banks, agencies, life companies, and debt funds. While benchmark rates remain relatively stable with the 10-Year Treasury holding around 4.10% (as of late November) — lenders are shifting their focus toward credit quality, liquidity, and execution certainty.

The result: even with stable rates, the bar for loan approval is now higher than it was just 30 days ago. Borrowers entering the market in December are facing stricter DSCR thresholds, reduced leverage on transitional assets, and deeper scrutiny of rollover, reserves, and sponsor financials.

Why Underwriting Is Tightening

Lenders are balancing three converging pressures:

• Year-end allocation management: Many institutions are nearing internal exposure caps and prioritizing only the “cleanest” transactions to close out 2025.

• Credit conservatism: Despite rate stability, banks and life companies are preparing for slower economic momentum heading into 2026.

• Stricter DSCR and leverage expectations: Even stabilized assets are encountering tighter DSCR minimums, and transitional deals are often sizing materially lower than earlier in the year.

 In short: the cost of capital hasn’t moved dramatically in the last two weeks, but the availability of capital has.

National Landscape: Selective Liquidity, Not Broad Tightening

On a national level, lenders remain active, but increasingly selective.

Lenders are prioritizing durability: stabilized multifamily, strong sponsors, and predictable cash flow. Spreads are stable to slightly narrower across certain asset types, yet underwriting adjustments are offsetting this benefit.

Agency lenders have also begun shifting attention toward mission-driven and affordability-scored deals as they manage production targets for the final weeks of the year. Conventional executions remain available but are being priced and sized with increased caution.

Chicago Signals: Stabilized Multifamily Remains the Clear Winner

In Chicago, the tightening trend is visible but uneven across asset classes.

• Multifamily: Still the most liquid category. Properties with >90% occupancy, clean T-12s, and 1.25x+ DSCR continue to receive competitive agency and bank quotes.

• Value-add/transitional assets: Experiencing the sharpest leverage pullback as lenders scrutinize exit plans, lease-up assumptions, and rent growth more closely. Underwritten rents need to reflect today’s market level, not trended to future years with an escalation assumption.

• Sponsor strength: Liquidity, global cash flow, and real estate-owned exposure are receiving heightened review, a shift that is especially noticeable among regional banks.

For borrowers with open refinance needs, the message is clear: December approvals will favor strong financial packages and “ready-to-close” profiles.

Opportunities & Risks

Opportunities

• Stable base rates mean borrowers entering the market today can still lock in attractive all-in coupons compared to earlier in 2025.

• Well-performing multifamily assets may capture better pricing before agencies shift fully into 2026 allocations.

• For buyers, selective lender behavior may create room to negotiate on acquisition terms as sellers adjust expectations.

Risks

• Tightened underwriting may reduce eligible leverage for transitional or partially stabilized assets.

• Sponsors relying solely on rate movement may find that credit constraints, not interest rates, limit proceeds.

• Year-end execution risk increases — fewer lenders want to take on new files that could slip into January.

Bottom Line

As the 10-Year Treasury steadies around 4.1%, rates are offering borrowers a moment of stability but underwriting standards are doing the opposite. Year-end lender behavior has tilted toward caution, making December a critical period where execution readiness matters more than rate timing.

For Chicago CRE owners and investors, this means aligning financials, rent rolls, and documentation now to secure favorable terms before lenders officially transition into 2026 credit frameworks.

To speak with our Capital Markets team about buying commercial real estate refinancing, please fill out the form below.