Commercial/Multifamily Borrowing Up 9% in First Quarter From Last Year

Real Estate In-Depth | May 2017

WASHINGTON—According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations released on May 4th, first quarter 2017 commercial and multifamily mortgage loan originations increased 9% compared to the same period last year, and in line with the seasonality of market, first quarter originations were 27% lower than the fourth quarter of 2016.

“Commercial real estate borrowing and lending started 2017 on much the same footing it ended 2016,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Multifamily properties remain the key force behind overall originations trends, and the GSEs continue to drive multifamily originations. Matching broader investment themes, financing backed by industrial properties also picked up, while retail declined.”

A rise in originations for industrial, health care and multifamily properties led the overall increase in commercial/multifamily lending volumes when compared to the first quarter of 2016. The first quarter saw a 40% year-over-year increase in the dollar volume of loans for industrial properties, a 22% increase for health care properties, a 14% increase for multifamily properties, a 2% increase for office properties, a 23% decrease in retail property loans, and a 40% decrease in hotel property loans.

Among investor types, the dollar volume of loans originated for Government Sponsored Enterprises (GSEs—Fannie Mae and Freddie Mac) increased by 33% year-over-year. Commercial bank portfolio loans increased 11%, life insurance companies loans were essentially flat from the first quarter of last year, and loans originated for Commercial Mortgage Backed Securities (CMBS) loans decreased 17%.

As is typical in comparisons of first quarter originations to fourth quarter originations, first quarter 2017 originations decreased 27% compared to the previous quarter. Among property types, hotel properties decreased 58% compared to the fourth quarter of 2016, a 48% decrease in originations for retail properties, a 39% decrease for health care properties, a 37% decrease for industrial properties, a 29% decrease for multifamily properties, and a 26% decrease for office properties from the fourth quarter of 2016.

Among investor types, between the fourth quarter 2016 and first quarter of 2017, the dollar volume of loans for CMBS decreased 40%, originations for GSEs decreased 29%, loans for life insurance companies decreased by 28%, and loans for commercial bank portfolios decreased 19%.