National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
CRE Lending Volume Retreats in Q1 2024
The commercial real estate lending market slowed in the first quarter of 2024 due to high interest rates and limited credit availability. However, a tightening of credit spreads indicated signs of stabilizing, CBRE reported.
The CBRE Lending Momentum Index, tracking the pace of CBRE-originated commercial loan closings in the U.S., decreased by 11% from Q4 2023 and by 32.7% compared with the strong loan volume of Q1 2023. The index closed Q1 2024 at a value of 168.
Credit spreads between the 10-year Treasury yield and seven-to-10-year fixed-rate permanent commercial loans, with loan-to-value ratios between 55% and 65%, tightened by 22 basis points quarter-over-quarter to 212. Multifamily spreads also tightened by 17 bps to 175.
“With investment sales down, we are seeing a shift towards hard maturity refinancings, construction loans and bridge lending, which is expected to continue until there is consensus on rate cuts,” said James Millon, U.S. president of debt & structured finance for CBRE. “While commercial banks are reducing their presence in the market, the combination of agency, life companies, CMBS and debt funds continues to support credit availability. Credit spreads remain favorable, but the challenge lies in securing accretive financings on core assets due to higher benchmarks.”
- ◦Financing
