Money flooded back into the office market last year, but it wasn’t spread evenly among building classes, according to a new report

Lenders outlaid nearly $46B in loans in 2025, a 92% increase from the year prior, according to a study by Avison Young. But 70% of new loan originations were for trophy office assets.

Lenders also preferred top gateway markets, with office loan originations jumping nearly 560% in Silicon Valley to $883M, more than 300% in Manhattan to $23.5B and 127% in Orange County, California, to $847M, the study shows.

At the same time, lenders pared back on office loans in Phoenix, Los Angeles and Washington, D.C. The capital district, for example, saw a 36% drop in office loan originations, totaling $713M, compared to 2024.

Lenders followed into markets where demand was rebounding. While overall office leasing in the U.S. was down nearly 10% year-over-year, San Francisco saw 40% more leasing and New York City saw nearly 8% more leasing in that time.

“Until we see a broader recovery in occupancy and a clearer resolution of distressed assets, office lending will likely remain bifurcated: a cautiously open tap for the few healthy markets and a trickle for the rest,” Avison Young U.S. Office Lead Danny Mangru and Senior Market Intelligence Analyst Sean Boyd wrote in the report.

Despite this extreme selectivity, Mangru told Bisnow there are signs of optimism within the study.

“We’re starting to see access to capital loosen up a bit, mainly on the debt side right now,” he said.

And it’s no longer just the cash-rich investors who are doing the buying, Boyd added.

“A lot of deals that were getting done in the last couple of years were heavily equity-based,” he said. “Now what we’re seeing is more debt being used.”

More than half of the office buys were by private investors, followed by institutional buyers who represented 23% of the total sales volume in 2025, according to the report.

Banks returned to the office lending game, with executives from a collection of regional banks — including Regions Financial, PNC, First Horizon and KeyCorp — projecting an increase in lending activity in the commercial property sector this year after the Federal Reserve reduced interest rates, CoStar reported.

But increased lending also coincided with a splash of cold water, as delinquency rates surged at the end of 2025. According to Morningstar, 16.5% of office loans were delinquent in the fourth quarter compared to 9.8% during the same period in 2024.

While buyers and lenders remain biased toward Class-A and trophy office assets, the dwindling supply will create new opportunities down the road. The scarce supply and an increase in companies leasing sub-Class-A space should see capital and debt flow into the Class-B and even Class-C office markets, Mangru and Boyd said.