According to CBRE’s report, the momentum of commercial real estate lending increased significantly in the fourth quarter of 2024 and is expected to continue improving in 2025 due to maturing debt. The CBRE Lending Momentum Index, which tracks the rate of commercial loan closings originated by CBRE in the U.S., rose by 21% from Q3 and a notable 37% year-over-year. This brought the index value for Q4 up to an impressive level of 259, surpassing its five-year pre-pandemic average of 229.
During this time period, there was also a decrease in average spreads on closed commercial mortgage loans compared to previous years. In fact, it dropped by an impressive margin of nearly half (49 basis points) year-over-year and only slightly increased (by one basis point) from Q3. Additionally, multifamily loan spreads tightened even further during this quarter with a reduction of twelve bps down to just156 bps – marking their lowest levels since Q1of2012.
James Millon,U.S.presidentofDebt&StructuredFinanceforCBRE commented on these findings stating that while there was certainly an increasein market activity duringQ4,the shift towards higher rates for ten-year Treasury bonds caused some deals were deferred as credit and equity hadto be recalibrated.However,this did not stopa significant amountof capitalfrom supporting competitive spreadsin variouscredit markets suchasCMBS SASBand conduit,CLOs,and agency,Lifeco,bank,repo,and debt funds.
Looking ahead intothe nextyear,Millon believes that we can expectto seean even more dynamic refinancingand investment salesmarket.Thiswill be drivenby several factors includingmaturingdebt,capitalreallocationwithin closed-endfunds,and strongfundamentals across most sectors withinthe realestate industry.
