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Commercial Real Estate Lending Increases in Q3 2019, Climbs 5% YOY
Commercial real estate lending activity remains positive according to the latest research from CBRE. The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S., reached a value of 264 in September 2019, up 8.2% from June’s close. Compared with a year ago, the CBRE index is up 5%.
Lending activity remains positive, following the Federal Reserve taking steps to calm financial markets’ growing concerns over sluggish global economic growth and ongoing trade disputes, with two interest rate cuts in the third quarter, and one in late October.
CBRE’s Brian Stoffers says, “The shift in Fed policy has supported the capital market environment for commercial mortgage originations. Underwriting on loans tracked by CBRE became more aggressive in Q3, marked by declines in underwritten cap rates and debt yields, and reversing the trend from Q2. The percentage of loans carrying either partial or full interest-only terms rose to 67.9%, a new high.”
CBRE’s lender survey indicates that life companies and alternative lenders (includes REITs, finance companies, debt funds) had another strong quarter and led origination activity in Q3 2019. Each lender group accounted for nearly 30% of non-agency commercial mortgage closings. While banks’ market share declined slightly, CMBS lenders’ share rose.
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