According to CBRE’s latest research, the commercial real estate lending market showed signs of stabilization at the end of 2023. Borrowing costs have appeared to reach their peak, despite subdued transaction activity. The firm reported that its Lending Momentum Index increased by 1.0% in Q4 from Q3 2023, marking the first quarterly increase since Q1 2022 and closing at a value of 189.
CBRE’s U.S. president of debt & structured finance, James Millon stated that while there are still challenges in the capital markets, there are more favorable lending conditions for certain asset classes. This is due to a decline in credit spreads and lower trading bands for benchmarks as well as an increase in cap rates.
In addition to this positive trend, banks continue to be major contributors to non-agency loan closings with a share of 39.5% in Q4 compared to their previous share of38%. Floating rate loans accounted for about one-thirdof total loan volume with most being allocated towards refinancing or property acquisitions.
Overall,CBRE predicts continued stability and growth withinthe CRE lending marketin lightof these recent developments.
