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The Mortgage Bankers Association’s 2023 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation has revealed some shocking figures in the commercial real estate market. With a significant decline in mortgage borrowing and lending, many are wondering what the future holds for the industry.

Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, explained that various factors contributed to the sharp decline in CRE borrowing and lending, including higher interest rates, uncertainty about property values, and concerns over the fundamentals of some properties. This reduction in originations was widespread across all major property types and capital sources, indicating a lower borrower demand influenced by fewer sales transactions and refinances.

Looking ahead to 2024, Woodwell anticipates a slow start due to high interest rates. However, with over $900 billion in loan maturities expected and a growing acceptance of these rates, there may be more activity in the market this year.

Multifamily properties stood out as the property type with the highest lending volume in 2023, totaling an estimated $264 billion. Mortgage banking firms played a significant role in closing CRE loans, with $306 billion in loans closed and $225 billion in intermediary transactions. Depositories emerged as the top capital source for CRE mortgage debt, followed by various other sources such as life insurance companies, pension funds, and government-sponsored enterprises.

With the commercial real estate market facing challenges in 2023, many are eagerly awaiting to see how the industry will evolve in 2024. Stay informed and sign up for our free weekly newsletter to receive relevant real estate news and actionable market intelligence.