Upstate New York Market Update: February 18, 2025
Written by Marty Cole, Analyst
MBA Conference 2025 Insights
Last week, The Largo Group of Companies attended the MBA CREF Conference in San Diego, holding formal meetings with over 55 lenders to discuss the current lending environment.
Life Companies Increase Lending & Tighten Pricing
In 2025, life insurance companies are eager to boost their commercial real estate lending allocations. To achieve this, many are either increasing the maximum loan size or expanding their funding volume. With more capital flowing into the market, spreads are narrowing, and lenders are offering sharper pencils than in previous years. Many insurance companies work exclusively through correspondent mortgage bankers, ensuring competitive rates that are among the best in the market.
Record Retail Lending; Multifamily & Industrial Remain Strong
In 2024, numerous lenders funded a record amount of retail properties, making it a standout year. Anchored retail centers with credit-rated tenants continue to be in demand, but well-located strip retail centers rebounded strongly post-pandemic, benefiting from solid job reports and a resilient U.S. consumer base.
However, multifamily and industrial sectors are still the industry’s top performers. Every capital source Largo spoke with expressed a strong interest in increasing their lending in these sectors in 2025. Due to halted development projects and stabilized occupancy, these asset classes continue to show great promise, often attracting the most competitive lending terms.
Focus on Flexibility in Loan Terms
Over the last two years, many anticipated rate drops that never materialized. Lenders are now fielding more requests for permanent financing with three-year terms. Floating rate products, which had previously fallen out of favor, are now receiving increased interest. Credit unions stand out for offering unparalleled flexibility, with no prepayment penalties throughout the loan term.
Even though some capital sources may offer competitive rates, credit unions have captured business that traditionally would have gone elsewhere. Their flexibility and fewer depository requirements compared to banks have made them an attractive choice. Insurance companies, typically offering yield maintenance as their prepayment structure, are finding ways to increase flexibility to stay competitive. Even CMBS lenders are discussing extending open periods at the end of loan terms to better accommodate client needs.
If the market settles into a “higher for longer” interest rate environment, this shift in flexibility will be crucial to watch.
CBRE 2025 Real Estate Market Outlook Takeaways: Office Space
Largo’s Marty Cole attended CBRE’s Buffalo Real Estate Market Outlook, where Julie Whelan, Global Head of Occupier Thought Leadership, shared key insights on office space trends. Drawing from millions of square feet of leasing data across the U.S., Whelan noted that office workers are increasingly gravitating toward high-quality spaces located closer to home. While in-person work remains relevant, tenants are now prioritizing several factors when selecting office locations.
Key Takeaways: Life Insurance Companies Lending
Quality Over Quantity: New leases are being signed with smaller footprints, particularly in Class A and Class A+ buildings. A noteworthy trend is that tenants in growth mode may sign a 10-year lease for core space, with shorter 2- or 3-year leases for additional space that fluctuates with demand.
Proximity to Home: Nationwide, downtown office occupancy is declining, and Upstate New York is no exception. Commuting an hour to work is becoming less common.
Access to Lifestyle Amenities: While on-site amenities like gyms or cafés are not required, properties with quick access to nearby restaurants, bars, gyms, daycare centers, and similar conveniences are seeing the strongest leasing activity.
Convenient Parking: Proximity matters—whether for safety concerns or weather, on-site parking is preferred. Nearby parking remains essential.
