CRE Lending Surges For Office, Healthcare And Industrial Projects
Borrowing in some corners of real estate surged in recent months, following a quiet 2024.
Commercial and multifamily mortgage loan originations in the second quarter were up 66% year-over-year and 48% quarter-over-quarter, according to a report from the Mortgage Bankers Association.
Year-over-year growth was particularly strong in the office sector, which saw originations rise 140%. MBA also tracked a 77% increase for healthcare properties, a 53% increase for industrial properties and a 30% increase for retail properties over the same period.
Originations for multifamily and hotel projects fell 35% and 30%, respectively, year-over-year.
The quarter-over-quarter data provides a bit more nuance. Lending in the office sector actually fell 18% over that period, while the metric surged 102% for industrial and remained flat for hotels.
Loans by investor-driven lenders ticked up by 93% year-over-year, while the metric grew 72% for life insurance companies and 59% for government-sponsored enterprises like Fannie Mae and Freddie Mac. MBA also tracked a 10% decrease in CMBS loans.
“While multifamily and hotel lending remain below last year’s levels, much of the strong annual growth reflects the exceptionally low levels of activity reported last year,” MBA Associate Vice President of Commercial Research Reggie Booker said in a statement.
“Lending by depositories more than doubled, and originations by investor-driven lenders surged by over 90 percent, highlighting renewed interest from both traditional institutions and private capital.”
Banks were moving bad debt off their books earlier this year after a wave of panic about CRE lending that followed the collapse of Silicon Valley Bank and Signature Bank in 2023.
“We're going through somewhat of a purgatory process right now for those loans that were originated at the height of market exuberance — call it the zero-interest-rate phenomenon,” Trepp Senior Manager of Research Tom Taylor told Bisnow earlier this year.
“Charge-off rates will likely increase, my guess is in the office property type, and I don’t suspect that many others will increase.”
