Commercial real estate is banks’ bread and butter, but many lenders are pulling back in this vital category as they contend with stiffer competition from nonbanks, a surge in loan delinquencies and broader economic forces, such as the increase of shared workspaces.

The rate of growth for CRE lending has dropped to its lowest level in at least three years as banks have tapped the brakes in lending to owners of both owner-occupied and non-owner-occupied commercial properties, according to FDIC call report data compiled by BankRegData.

Robert Reilly, the chief financial officer at the $368 billion-asset PNC Financial Services Group in Pittsburgh, recently told investors and analysts that deal volume has slowed considerably in recent quarters.

“If you go back a year and a half or so, originations are down maybe 30%,” Reilly said at investor conference hosted by Morgan Stanley in mid-June.

Justin Bakst, director of capital markets at the real estate data provider CoStar Group, said that deal volume has tightened, in part, because the U.S. economy is in the late stages of its recovery and the pace is returning to more typical levels.

Total transaction value for commercial real estate deals fell 6% last year, to $582 billion, compared with the year prior, according to CoStar.

“CRE transaction volume hit its peak in 2015 and it remained high in 2016,” Bakst said. ‘We’re now coming down off those historic highs.”

As the pool of deals shrinks, banks are adding fewer CRE credits to their books. Total commercial real estate loans rose 0.8% from the fourth quarter to the first quarter, to $1.4 trillion, according to BankRegData. That compares to a 1.6% increase in the same period two years earlier. (The figures compiled by BankRegData include only owner-occupied and non-owner-occupied properties, which are the two largest segments of CRE loans.)

At least some of the pullback by banks is a result of nonbank lenders, particularly private-equity funds, swooping in and stealing banks’ business, said Joe Walker, the head of CRE lending at the $6.9 billion-asset WSFS Financial in Wilmington, Del.

“Private equity will come in and do either the entire loan, or a portion of the loan and we will be the subordinate lender,” Walker said. “The CRE loans we do are safer, but they’re smaller.”

From Dec. 31 to March 31, CRE loans at WSFS dropped 0.2% to $2.3 billion. It’s still the largest category at WSFS, representing about 47% of its total loan book.

Broader economic changes may also be contributing to the decline in CRE loan growth rates. Shared-workspace companies like WeWork and Regus have changed the business of managing and developing office buildings, said Gary Magnuson, the head of commercial real estate finance at the $158 billion-asset Citizens Financial Group in Providence, R.I. The result is that overall demand for office space could be shrinking.

“Tenants are using less space,” he said. “They want more flexible space. The trend is toward fewer offices.”

Lenders may also be spooked by a recent uptick in early-stage delinquencies, said Doug Ressler, the director of business intelligence at the real estate data provider Yardi-Matrix. CRE loans that are between 30 and 89 days late rose 26% to $4.5 billion from the fourth quarter to the first quarter.

As more loans become past-due, it’s diminishing banks’ appetite for risk, Ressler said.

“There’s an awful lot of wait-and-see attitude that’s playing out here,” he said.

That attitude appears to be the new normal when it comes to bank lending for commercial real estate.

“We love the business,” Wells Fargo CEO Tim Sloan said on May 31 at an investor conference. “But … you need to be careful out there.”

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