Banks that are starting to move off the sidelines and increase their commercial real estate lending are finding it may not be so easy to regain market share.

Banks have traditionally played a critical role in providing needed capital to the real estate industry. Depositories, which include banks and credit unions, represent about 40 percent of the total $4.8 trillion in outstanding commercial real estate loans, according to the Mortgage Bankers Association (MBA).

The large national and regional banks tightened credit over the past two to three years for a variety of reasons. Chief among them were concerns related to their commercial real estate exposure in a rising rate environment, a wave of loan maturities that have been slow to roll off balance sheets, and 2023 regional bank failures that heightened the overall focus on deposits and loan risk. Bank activity, which is typically between 37 percent and 40 percent of origination volume, has dipped to about 33 percent, w