WASHINGTON, D.C. — Total commercial real estate lending is estimated to have totaled $429 billion in 2023, according to a year-end report from the Mortgage Bankers Association (MBA). This figure represents a 47 percent decline from 2022 when lending volume totaled $816 billion and a 52 percent decrease from the record $891 billion set in 2021.
Jamie Woodwell, MBA’s head of commercial real estate research, attributes the drop-off in loan volume last year to a combination of higher interest rates and uncertainty with property values and operating fundamentals in some property sectors, namely office.
“The declines were broad-based, covering every major property type and capital source,” says Woodwell. “Much of the drop in originations was driven by a decline in borrower demand stemming from slowdowns in sales transactions and refinances. If property owners had the ability to sit pat, they generally did.”
According to MBA, depositories such as banks were the leading capital source of mortgage debt for commercial real estate loans, followed by life insurance companies and pension funds, government-sponsored enterprises (Fannie Mae and Freddie Mac), private label CMBS and investor-driven lenders. Among different property types, multifamily properties saw the highest volume last year, with an estimated $264 billion of total lending.
Woodwell adds that 2024 is off to a slow start in lending volume but loan maturities backed by commercial real estate, which exceed $900 million for the year, should bring more deals to the market.