FEATURES
A Mid-year Look at Commercial, Multifamily Real Estate Finance By Troy Marek
I
Troy Marek
f there’s one word to describe busi-
In April, however, MBA adjusted its com-
Drilling down deeper, not all commercial as-
nesses and the overall economy
mercial and multifamily lending forecasts for
set classes share the same finance outlook
over the last two years, it would be
2022, citing the shifting economic and inter-
as multifamily. For example, the health of the
“resilient.” Despite uncertainties, U.S.
est rate outlook. MBA expectations are that
office sector remains unpredictable. The
economic growth was still strong in the first
commercial and multifamily lending will hold
“work-from-home” effects of the pandemic
quarter. At the same time, the near certainty
steady at a projected $895 billion in 2022,
are yet to be fully realized. Many companies
of higher interest rates calls for prudent plan-
roughly in line with 2021’s $891 billion. Mul-
are using hybrid or fully remote models,
ning in the commercial real estate sector.
tifamily lending, which is included in these
downsizing or fully jettisoning their office
There is also the backdrop of the conflict
figures, is expected to dip to $418 billion this
space, Trepp reported. In February, MBA
between Russia and Ukraine and gas prices
year, down from 2021’s estimated $470 billion.
noted a 122% year-over-year increase in the
that remain significantly elevated.
However, MBA still considers this multifamily
dollar volume of office loans. As of April, the
expectation robust and anticipates borrow-
office sector encompassed 4,907 loans at
Despite all this, the economy in March add-
ing and lending to grow in 2023 to nearly $950
a total balance of $197.66 billion, with urban
ed 413,000 jobs and the unemployment
billion of total commercial lending, with $442
offices comprising 71% or 2,592 loans at a
rate dipped to 3.6%, a decline of 0.2%. This
billion in multifamily lending part of this total
$140.36 billion balance. Lenders today are
unique set of variables has contributed to
expectation. MBA notes that, even with rising
evaluating office transactions based on lo-
a shift in the year’s commercial real estate
interest rates likely to impact lending volumes
cations, both pre- and post-pandemic tenant
finance outlook, according to Trepp’s April
this year, healthy property values and fun-
stability, tenant creditworthiness and lease
2022 monthly report.
damentals should support the markets and
rolls during the loan terms.
maintain commercial real estate mortgage In February, the Mortgage Bankers Associa-
demand at strong levels.
tion (MBA) released a report on commercial
In the retail sector, supply chain bottlenecks, a continued increase in online shopping
and multifamily mortgage originations for the
“If the pandemic proved anything, it was that
and higher costs due to inflation are all ar-
fourth quarter of 2021. The report pointed to
rental housing is essential,” said Ed Hussey,
eas to watch; however, COVID-19-related
the quarter as a record end to a record year
head of conventional agency lending at Sabal
shutdowns no longer keep customers from
of lending. MBA’s numbers demonstrated a
Capital Partners. “Lenders remain bullish on
entering stores. Per the MBA, retail deliv-
79% increase in originations year-over-year
multifamily and are committed to financing it.
ered a year-over-year increase, from 2020 to
and a 44% increase over the previous quar-
Properties that serve the country’s workforce
2021, of 109% in the dollar volume of loans.
ter. Rebounding property fundamentals, re-
and lower-income earners remain top targets
Likewise, Trepp’s Year-End 2021 report found
cord sale transaction volume and low interest
for lenders as demand continues to surge for
annual retail property loan delinquency rates
rates were among reasons cited for the jump.
these units amidst lackluster supply.”
declined; however, it also noted a significant
54 MANN REPORT | JUNE & JULY 2022
