Commercial/Multifamily Market Intelligence Blog

April 28, 2023

Two questions have dominated the CRE headlines of late: a) the reliance of banks on commercial real estate and b) the reliance of commercial real estate on banks. We addressed the former in a previous Chart of the Week. Here we look at the latter with a particular focus on office—the property type attracting the greatest scrutiny.

March 31, 2023

There is a great deal of uncertainty about the future path of the U.S. economy, partially driven by -- and partially contributing to -- decisions that will be made by the Federal Reserve. The economy ended 2022 on a strong note, with inflation-adjusted gross domestic product growing at a seasonally adjusted annual rate of 3.2 percent in Q3 and 2.6 percent in Q4. That growth came after declines of 1.6 percent in Q1 and 0.6 percent in Q2, leading to growth of just 0.9 percent for 2022 as a whole.

March 24, 2023

Many Federal Reserve data series for CRE include not just loans backed by income-producing CRE (think apartments, office, retail, industrial, and other properties for which owners charge rents for people’s or firm’s use of the space), but also construction and development loans (which includes a large share of loans backing construction of single-family and for-sale homes), loans backed by farmland, and loans collateralized by owner-occupied properties (which are generally C&I loans with the extra protection of real estate but no reliance on rents, leases, and the like). In most MBA data, we try to strip out these other categories to focus on income producing CRE, which is what we think most market participants generally mean when talking about the CRE market.

March 15, 2023

At MBA’s CREF Convention in San Diego last month, we released the results of our annual survey of upcoming commercial and multifamily mortgage maturities. The survey collects information directly from loan servicers on when the loans they service mature. As in past years, the numbers we released covered loans held by non-bank lenders—including those guaranteed by Fannie Mae, Freddie Mac, and FHA, as well as those held by life companies, included in commercial mortgage-backed securities (CMBS), made by investor-driven lenders like debt-funds, mortgage REITs, and other credit companies. While the information we collect covers essentially all the loans in those groups, it has typically covered only a sample of loans held by banks. This year’s survey, however, collected information on $400 billion of bank-held commercial and multifamily mortgages—23 percent of the outstanding universe. Using this year’s survey results, for the first time we are expanding our loan maturity analysis to include an estimate of the maturity profile of all commercial and multifamily mortgages—including the more than $1.7 trillion on bank balance sheets.

January 05, 2023

At the end of 2021, the typical (median) member of the Federal Reserve’s Open Market Committee expected the Fed Funds rate to end 2023 at 1.6 percent. In June 2022 that figure had risen to 3.8 percent. In December 2022 it had risen again, to 5.1 percent. Those shifts in outlook from the Fed are both a response to changing economic conditions as well as a cause of change themselves. And commercial real estate markets are not immune to either, with uncertainty – and volatility – around the paths of the economy, interest rates and property valuations all causing significant instability for the market.

January 05, 2023

The US economy, and thus commercial real estate markets, are facing a period of uncertainty as the Federal Reserve continues to signal it will do everything in its power to bring down inflation. Using short-term rates as their hammer, the Fed is sifting through economic data to try to gauge how high rates will have to go and how long they will have to stay there to tame price growth. Both the Fed and market participants are also working through what damage those actions are likely to cause to the economy. The impacts on commercial real estate markets are likely only beginning to show up.

December 15, 2022

Housing costs are – appropriately – getting a lot of attention. Part of that attention stems from affordability challenges heightened by recent rapid increases in home prices, interest rates, and rents. Another part stems from the fact that shelter costs are such a significant driver of measures of inflation, and thus a key motivator of Federal Reserve policies. In this week’s Chart of the Week, we examine selected indices of housing costs. Until recently, various gauges of housing costs moved more or less in unison. These include: a) Asking rents, like those tracked by Zillow and the Housing Vacancy Survey (HVS), b) In-place rents, like those followed by the consumer price index (CPI) for rents and for owners’ equivalent rents (OER), and c) Mortgage principal and interests (P&I) payments, like those tracked by MBA’s Purchase Application Payment Index (PAPI).

November 21, 2022

MBA Now with Jamie Woodwell on Commercial/Multifamily Market Conditions, Office White Paper, and MBA's CREF23.

October 03, 2022

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.

July 21, 2022

Total commercial and multifamily mortgage borrowing and lending is expected to fall to $733 billion this year, down 18 percent from 2021 totals ($891 billion). This is according to an updated baseline forecast released July 19 by the Mortgage Bankers Association (MBA).

July 07, 2022

Commercial and multifamily real estate sits at the convergence of three markets – space, equity and debt. During the first quarter of 2022, space markets continued to move out of the shadow of the early days of the pandemic while property equity and debt markets continued the momentum from 2021. As we close out the second quarter (for which data will begin to become available in coming months) all three of the markets – space, equity and debt – are in states of significant transition. The information in this quarter’s Data Book largely reflects where markets were prior to the recent “resets.”

March 22, 2022

Each year, MBA's Commercial Real Estate/Multifamily Finance Firms - Annual Origination Volumes report presents a comprehensive set of listings of commercial/multifamily mortgage originators, their volumes, and the different roles they play. The report presents origination volumes in more than 140 categories, including by role, by investor group, by property type, by financing structure type and by the location of the originating office.

March 04, 2022

On Thursday, February 24, Russian troops invaded Ukraine in an unprovoked assault on a peaceful neighbor. Through ground, sea, and air attacks, the Russian military since then has killed countless Ukrainian citizens and kicked-off a massive dislocation as more than a million Ukrainians seek refuge in neighboring countries while millions more remain in Ukraine to defend their nation. The world has been inspired by their resolve and unity.

January 14, 2022

On Friday, January 7, 2022, the U.S. Department of Treasury released their latest monthly update on the allocation of funds from the Emergency Rental Assistance (ERA) program.

December 11, 2021

November 19, 2021

Each quarter the U.S. Census Bureau reports vacancy rates for homeownership and rental properties. Homeownership units are defined as those that are owner-occupied or are year-round units either sold and awaiting occupancy or currently for sale.

October 22, 2021

Sometimes research is like putting a puzzle together - trying to fit one piece of information with another to create a full picture of what's happening. This week, we are adding a new, final piece to the puzzle of how much commercial real estate lending happens each year.

September 30, 2021

The US economy continued its strong rate of growth during the second quarter, with the gross domestic product increasing at a seasonally adjusted annual rate of 6.6 percent and surpassing its pre-pandemic level. Consumer spending continued as a key driver - with June retail sales, excluding motor vehicle and parts dealers, 15.7 percent higher than a year earlier. It's important to note that the growth in sales wasn't a bounce-back from pandemic-related declines.

September 10, 2021

Commercial and multifamily property prices are the product of two things: a) the net operating income (NOI) a property produces and/or is expected to produce and b) the multiple of that income (the capitalization or "cap" rate) investors are willing to pay in order to own that income stream. Thus, Property Value = NOI/Cap Rate.

August 13, 2021

Research Institute for Housing America (RIHA), MBA's think tank, released updated second-quarter 2021 results that allow us to assess how renters, mortgagors and student loan borrowers fared over the first 15 months of the pandemic. The updated analysis of the Understanding America Study (UAS) panel survey data, conducted by Gary Engelhardt of Syracuse University, and Mike Eriksen of the University of Cincinnati, provides close to real-time economic data on the evolving financial consequences of the pandemic by following, on a weekly basis, the same set of households from before the outbreak.

July 09, 2021

When looking at commercial and multifamily mortgage delinquency rates, we tend to exclude loans that have been delinquent for less than 30 days, as many may be experiencing a temporary "hiccup" that will be quickly remedied before the next payment is due. But examining these rates can provide key insights into commercial and multifamily mortgage performance through the pandemic and into today.

June 28, 2021

Since the onset of the coronavirus pandemic, commercial real estate practitioners have been faced with two fundamental questions: How would properties perform through the pandemic and what would conditions look like on the other side - after the pandemic?

June 11, 2021

The release last Friday of the Biden Administration's proposed Fiscal Year 2022 Budget put down in black and white - and dollars and cents - many suggestions that have been made in more general terms in the Administration's American Jobs and Family Plans, during the most recent Presidential campaigns and in some cases going back decades. While the overall budget lays out a host of important programmatic and spending priorities, tax items that some might consider "pay-fors" for the proposed infrastructure spending have drawn the most attention in commercial real estate circles.

May 14, 2021

On Wednesday, May 5, 2021, U.S. District Court Judge Dabney Friedrich issued an order vacating the U.S. Centers for Disease Control and Prevention's (CDC) national eviction moratorium, but also put a temporary pause on the order, meaning that (as of this writing) the CDC moratorium, which is scheduled to expire on June 30, 2021, remains in place. A number of state-level bans also remain.

March 31, 2021

The US economy continued to rebound during the fourth quarter of 2020 but did so at a slower pace than Q3 of 2020 or what is expected to be recorded in Q1 2021.

January 01, 2021

When the Covid-19 pandemic hit the United States in March, it raised two fundamental questions for owners, lenders and others involved in commercial real estate: a) How would properties get through the pandemic and recession and b) What would the "new normal" be for the sector post-pandemic? One thing became crystal clear early on - the answers to those two questions would vary dramatically by property type.