2022 Q2 Quarterly Databook

October 3, 2022 Jamie Woodwell; Reggie Booker



Commercial and multifamily real estate sits at the confluence of three distinct markets – space, equity and debt – all three of which are going through significant transitions, as is the U.S. economy as a whole.

The second quarter was the second consecutive quarter of negative growth in real gross domestic product (GDP).  The 0.6 percent decline followed a 1.6 percent drop in Q1.  While two consecutive quarters of drops in GDP are often seen as a sign of recession, the Q1 decline was driven by weakness in net exports and inventories – neither of which appeared to show fundamental weakness in the economy as a whole.  Expectations are that Q3 will return to positive, although slow, growth.

At the same time, the labor market has remained tight.  Businesses added an average 349,000 jobs each month during the quarter, followed by 526,000 jobs in July and 315,000 in August.  The unemployment rate, which sat at 3.6 percent throughout Q2 and fell to 3.5 percent in July, rose to 3.7 percent in August, but only because the 786,000 people who joined the labor force outnumbered the 442,000 additional people with jobs that month.

Retail sales have continued to benefit from consumers’ past savings and growing wages – with sales excluding motor vehicles and parts dealers up 8.5 percent over the last year and more spending going to services.


Commercial real estate (CRE) fundamentals vary dramatically by property type.   Apartment vacancy rates are – at 5.6 percent according to the Census Bureau – the tightest they have been since the mid-1980s.  Industrial markets are similarly tight.  Retail and office vacancies are higher than pre-pandemic levels, although measurement, particularly of office, is made more complicated by the presence of space that may be leased but not being used.  The tight apartment and industrial markets have led to significant increases in asking rents – with apartment rents up 17 percent over the last year.  Because renewed apartment leases generally do not rise as much as those of empty units, those figures do not necessarily represent the change in rents paid by the typical renter, which the Bureau of Labor Statistics estimates at 6.7 percent. Of all the property types, office continues to draw the greatest attention, although not necessarily in a good way.  To help better understand some of the key drivers of coming demand for office, MBA released A Framework for Considering Office Demand in a Post-Pandemic World (https://www.mba.org/news-and-research/newsroom/news/2022/09/09/the-office-market-has-likely-changed-forever.-look-to-the-labor-market-for-clues-on-how-big-the-shift-will-be)

The white paper looks at the relative benefits and costs of remote and in-person work to employees and employers. It finds that in the near term, remote work can be just as, if not more, effective than office work in terms of “getting the job done,” while also providing a range of tangible short-term benefits. The findings also reveal, however, that companies and workers rely heavily on in-person interactions to develop workplace capital, helping them thrive over the long term. The pandemic has elevated the weight of the near-term benefits of remote work while reducing the pull of developing workplace capital.

The white paper presents two scenarios – a base case where hybrid work trends remain, and an alternative case where a looser labor market and “a fear of missing out” lead to a greater return to in - office work – to analyze the outlook for the office sector and potential impacts to commercial mortgage loan volume and property values.


After a record start to the year in terms of the dollar volume of commercial real estate property sales, the velocity has begun to slow markedly.  Q1 and Q2 – at $162 billion and $169 billion for sales of the major property types – were the largest first and second quarters on record, up a combined 44 percent from 2021 volumes.   That changed in July, with sales volume down 7 percent from a year earlier, and August, with volume down 41 percent.

The changing market conditions are just starting to show up in some of the data series tracking cap rates and property values.   The commercial property price index from Green Street Advisors reported a 4.9 percent drop in values during Q2 while the Federal Reserve’s series showed a 1.8 percent fall and Real Capital Analytics showed a 1.9 percent increase.


Borrowing and lending backed by commercial real estate set another quarterly record from April through June, although the pace of increase slowed from the first quarter. Property owners, investors, and lenders continue to work through broader economic uncertainty that is affecting the space, equity, and debt markets. MBA is forecasting that borrowing and lending will slow during the second half of the year. That said, improvements in fundamentals and values in recent years provide significant support to properties with outstanding loans and continued financing opportunities for properties whose cash flows can support debt.

Compared to a year earlier, a rise in originations for retail, hotel, and multifamily led the overall increase in commercial/multifamily lending volumes. By property type, retail increased by 108 percent, hotels increased by 37 percent, multifamily increased 24 percent, industrial increased 3 percent, office decreased 11 percent and health care decreased by 3 percent.

Among investor types, the dollar volume of loans originated for depositories increased by 102 percent year-over-year, government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) increased 29 percent, and investor-driven lenders increased 12 percent. Commercial Mortgage-Backed Securities (CMBS) decreased 57 percent and lending for life insurance company portfolios decreased 5 percent.


Total commercial/multifamily mortgage debt outstanding rose to $4.38 trillion at the end of the second quarter. Multifamily mortgage debt alone increased $35.7 billion (1.9 percent) to $1.9 trillion from the first quarter of 2022.

The $99.5 billion increase in commercial and multifamily mortgage debt outstanding in the second quarter was the second largest quarterly rise since the inception of MBA’s data series in 2007. The increase in holdings by depositories was the largest on record. The data match the fact that the first half of 2022 saw more commercial and multifamily borrowing and lending than any previous January through June period. 

Commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $51.9 billion (3.2 percent). REITs increased their holdings by $22.3 billion (14.4 percent), life insurance companies increased their holdings by $13.1 billion (2.1 percent), and agency and GSE portfolios and MBS increased their holdings by $8.0 billion (0.9 percent).  Given a variety of changes in space, equity, and debt markets since the start of the year, we expect the pace to slow considerably in coming quarters.

Delinquency rates for commercial and multifamily mortgages fell again during the second quarter of 2022.  Many capital sources are seeing delinquency rates at or approaching pre-pandemic levels, which were some of the lowest delinquency rates on record. MBA survey data have shown significant differences by property type as the COVID-19 pandemic’s effects have morphed.  These property-type differences, particularly across changing economic conditions, will continue to be a key factor in commercial and multifamily loan performance.

Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the second quarter of 2022 were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.49 percent, a decrease of 0.07 percentage points from the first quarter of 2022;
  • Life company portfolios (60 or more days delinquent): 0.04 percent, a decrease of 0.01 percentage points from the first quarter;
  • Fannie Mae (60 or more days delinquent): 0.34 percent, a decrease of 0.04 percentage points from the first quarter;
  • Freddie Mac (60 or more days delinquent): 0.07 percent, a decrease of 0.01 percentage points from the first quarter; and
  • CMBS (30 or more days delinquent or in REO): 2.95 percent, a decrease of 0.41 percentage points from the first quarter.