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CBRE: CRE Lending Market is Stabilizing
The commercial real estate lending market showed signs of stabilization at the end of 2023, CBRE said Tuesday. Borrowing costs appearing to have peaked, even as transaction activity remains subdued, according to the firm’s latest research.
The CBRE Lending Momentum Index, which tracks the pace of CBRE-originated commercial loan closings in the U.S., increased by 1.0% in the fourth quarter from Q3 2023,marking the first quarterly increase since Q1 2022. The index still saw a decline of 38.1% compared to the strong loan volume of Q4 2022. The index closed Q4 2023 at a value of 189.
“While the capital markets continue to present challenges, we are seeing more constructive lending conditions for specific asset classes,” said James Millon, U.S. president of debt & structured finance at CBRE. “We are experiencing a material decline in credit spreads in the liquid markets, lower trading band for benchmarks and a reset of cap rates at higher levels. Additionally, as the Federal Reserve has indicated interest rate cuts on the horizon, these factors combined have created a more favorable transactional environment in the first quarter.”
Banks maintained their position as the largest contributors to CBRE’s non-agency loan closings for the seventh consecutive quarter, accounting for 39.5% of the total in Q4 2023, up from 38.4% in Q3. Floating rate loans contributed about a third of the quarter’s loan volume, with 38% allocated to refinancings and the remainder supporting property acquisitions.
- ◦Financing
