Opinion: Why 20% down has become the exception in commercial real estate

“I can’t remember the last commercial real estate acquisition I financed with only 20% down.” Not because banks suddenly became dramatically more conservative. Not because buyers became more risk-averse. The math simply no longer works. As an investor, commercial real estate broker, property manager and private lender, I’ve watched this shift unfold in transaction after transaction over the past several years. One of the most common conversations I’m having today isn’t about finding the right property—it’s about helping buyers and sellers understand why financing looks so different than it did just a few years ago. For years, commercial real estate investors could begin underwriting almost any acquisition with one basic assumption: plan on bringing approximately 20% down. It wasn’t a guarantee, but it was a reliable starting point. Interest rates were historically low, debt was inexpensive and many income-producing properties generated enough cash flow to satisfy lender requirements while still supporting an 80% loan-to-value ratio. Today, that assumption has become outdated. Across nearly every commercial asset class, investors are discovering that 25% to 30% equity is becoming th...