Stress in the banking system and financial market volatility continued to slow commercial real estate lending activity in the first quarter of 2023, according to the latest research from CBRE. The CBRE Lending Momentum Index, tracking the pace of CBRE-originated commercial loan closings in the U.S., declined by 33% from Q4 2022 and 53.5% from a year earlier, closing Q1 at a value of 204.
Rachel Vinson, President of Debt & Structured Finance for Capital Markets at CBRE commented that “the Federal Reserve’s commitment to reduce inflation with aggressive rate hikes continued to heighten market uncertainty through the first quarter.” She added that “while plenty of debt capital remains available, increased borrowing costs coupled with credit tightening continues to put downward pressure on lending activity,” noting that borrowers will likely opt for shorter-term fixed-rate debt with shortened call protection until volatility begins normalizing again.
