Private Credit Surge: How Non-Bank Lending Is Filling the 2026 Funding Gap
Executive Summary
Private credit remains one of the clearest structural shifts in property finance, but the 2026 version of the story is more disciplined than the boom-era version. Borrowers are getting some relief as benchmark rates fall, yet lenders have not abandoned underwriting discipline. NAIOP's fourth-quarter 2025 Debt Market Survey describes a market in which fixed-rate spreads widened modestly, floating-rate borrowers continued to benefit from lower SOFR, and shorter-term or floating-rate structures became more attractive.
The demand side is strengthening too. In Savills' 2026 European OpRE Investor Sentiment Survey, 19% of respondents said debt strategies were their preferred route into operational real estate, up from 11% in 2025. That is a meaningful shift. It shows investors increasingly want exposure to property cash flows without taking full development or operating equity risk.
Debt As Preferred Route
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Savills respondents preferring debt strategies for OpRE exposure in 2026, up from 11% in 2025
Value-Add Easiest To Raise
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Share of Savills respondents saying value-add capital is easiest to raise
Core+ Easiest To Raise
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Share of Savills respondents saying Core+ capital is easiest to raise
Key Insight
The private-credit opportunity is strongest where flexibility matters most: bridge debt, transitional assets, operational real estate, and recapitalisations that banks still underwrite cautiously.
Why The Market Opened Up Again
NAIOP's debt survey captures the basic shift: borrowers are finding relief because benchmark rates have fallen, especially for floating-rate debt, but lenders are still policing spreads. That combination is healthier than a pure rate-driven rally because it supports refinancing activity without encouraging reckless compression.
NAIOP's March 2026 capital-markets report makes the broader point even more clearly. U.S. commercial real-estate markets entered 2026 in a transitional phase defined by improving liquidity, moderating inflation, and persistent rate-driven volatility. The rapid repricing cycle appears largely complete, but valuation recovery remains sensitive to long-term interest rates.
For private lenders, that is nearly ideal. Borrowers need speed and certainty. Banks remain selective. And the market still pays for structure.
Where Private Credit Has The Edge
Private credit is not winning because it is cheaper. It is winning because it is more adaptable.
| Use Case | Why Private Credit Wins | 2026 Read-Through |
|---|---|---|
| Bridge refinancing | Faster execution and custom maturities | Borrowers still need time for leasing and asset stabilisation |
| Operational real estate | Comfort with complex cash-flow profiles | Debt is a preferred route into OpRE for a growing share of investors |
| Value-add office or hotel | Can underwrite business-plan risk that banks dislike | Repositioning remains more financeable than speculative new development |
| Structured recapitalisations | Can layer senior, whole-loan, and mezzanine capital | Managers are using recapitalisations to manage slower fundraising and exits |
The Savills survey is especially useful here because it links debt appetite to operational real estate, where platform scaling and access to stock remain real constraints. If investors are increasingly comfortable entering through debt, private lenders gain both pricing power and more repeat business from specialist operators.
What Could Go Wrong
The bullish narrative has limits. NAIOP's capital-markets report still describes a valuation recovery that is highly sensitive to long-term rates. That means private-credit strategies can look safer than equity while still carrying meaningful refinance and collateral risk.
There are three main risks to monitor.
- Long-end rates staying sticky even as short rates fall.
- Asset-level cash flows underperforming business plans in office, hotel, or living sectors.
- Competition compressing spreads before collateral values fully stabilise.
Private Credit Conditions In 2026
Scoring the current setup from a lender's perspective
Sentiment
The correct sentiment for private credit in 2026 is positive with discipline. Conditions are supportive, but not carefree. The strongest opportunities sit in transitional lending, operational real-estate debt, and deals where structure can solve a specific problem that bank balance sheets still hesitate to address.
That is exactly why the asset class remains attractive: it earns a premium for underwriting complexity rather than simply for taking blind duration or development risk.
Conclusion
Private credit is filling a real gap in property finance, but it is doing so in a more mature way than the easy-money narrative implies. Borrowers are benefiting from lower benchmark rates, investors are showing a clearer appetite for debt exposure, and lenders still have room to price complexity.
For allocators, that makes 2026 a good environment for selective private-credit exposure, especially where the loan structure is tied to a credible operating or stabilisation plan. The opportunity is real. The discipline has to be real too.