Commercial Real Estate Lending Market Update and Analysis: Q1 2024 Trends and Insights
The U.S. commercial real estate lending market experienced a slowdown in the first quarter of 2024, according to new data from CBRE. The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings, decreased by 11% from the previous quarter. However, there are signs of stabilization with a tightening of credit spreads.
Credit spreads between the 10-year Treasury yield and fixed-rate commercial loans tightened quarter-over-quarter, indicating improving market conditions. While the market saw a decline in lending activity, there is an uptick in institutional investors seeking capital, leading to an increase in broker opinion of value (BOV) activity and financings over $100 million.
Alternative lenders, such as debt funds and mortgage REITs, emerged as the leading contributors to non-agency loan closings in Q1 2024. Banks, life insurance companies, and CMBS conduits also played significant roles in the lending market.
There have been slight changes to underwriting criteria in Q1 2024, with average underwritten cap rates and debt yields stabilizing. Government agency lending on multifamily assets decreased, but average fixed agency mortgage rates fell slightly.
Overall, the commercial real estate lending market is showing signs of stabilization and recovery, with different lending groups playing important roles in financing activities. Stay informed with the latest real estate news by signing up for our free weekly newsletter.
