The growing role for private debt in commercial real estate

Borrowing needs for commercial real estate (CRE) can be varied and complex, and owners need a full range of options when considering an acquisition or refinancing. As part of their funding strategy, they may want to consider private debt, which has become an important source of capital for a wide range of situations.

Private debt can be especially useful when an owner or buyer needs a bridge loan, short-term financing for a property that is being renovated, leased-up, repositioned or stabilized.⁽¹⁾ Financing from the private markets also might be appropriate for new construction or a redevelopment project. Borrowers might turn to private markets if they want to finance a larger percentage of a property’s value.

Private market CRE lenders offer versatile options—and they are filling a need. Banks have become more selective in the loans they are willing to make, reacting to regulatory changes that raised capital requirements following the global financial crisis.⁽¹⁾ This has created opportunities for private market lenders, particularly in higher-risk credit where regulated banks might be less willing to lend.

The overall trend toward private market CRE lending is clear.⁽¹⁾ Alternative lenders, including private debt funds and mortgage REITs, made up 40% of the total volume of CRE loan closings in the fourth quarter of 2025, according to data from CBRE that excludes agency lending guaranteed by Fannie Mae and Freddie Mac⁽²⁾. Alternative lenders had the largest share of non-agency CRE loans, while banks had 35% and life insurers 19%.⁽²⁾ According to the above CBRE article, lending volume by debt funds more than doubled in the fourth quarter from a year earlier.

A number of Capital One clients are becoming familiar with private debt as one of their options, says Peter Szewczyk, head of CRE balance-sheet lending for the East Region at Capital One. Capital One is one of the largest providers of warehouse financing to CRE debt funds and has long-standing relationships with the top private credit providers in the sector. Building on those partnerships, the bank can work with CRE borrowers throughout the process to suggest a carefully tailored and seamless financing package, whether directly on balance-sheet or through a private-credit solution, Szewczyk explains.

“We think of working with CRE debt funds as a team sport,” says Szewczyk. “We want to provide our clients with a wide variety of financing solutions, whether it’s a loan we make, credit from a private debt fund, or a lending package that combines several products.”

Private markets have become a mainstream source of CRE finance that fills specific roles across the life cycle of a property. An owner might take a construction loan from a bank or private lender for a new project, a private debt bridge loan during lease-up or some other transitional period, a bank loan once cash flows are established, and then agency funding for an eligible, stabilized property. What’s key is having access to all the options—preferably in one place.

“We have a full menu of financing solutions for our CRE clients,” says Ahmed Hasan, head of agency finance at Capital One. “That allows for a lasting relationship, delivering what the client needs today while also anticipating how that will evolve and change so we can bring the right products at the right time.”

We believe borrowers value knowing that their bank can offer more than bank loans. A banking relationship can be the focal point for all potential CRE financing solutions. The Capital One team focuses on building deep relationships and crafting a borrowing package aligned to the client’s business goals and risk profile.

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1. Capital One, "Navigating the 2026 Commercial Real Estate Landscape," GlobeSt., March 23, 2026.
2. CBRE, "Commercial Real Estate Lending Momentum Continues to Improve," press release, February 9, 2026.