The commercial real estate lending market is beginning to stabilize, CBRE said Monday. Borrowing costs appear to have peaked, even as transaction activity remains subdued.
The CBRE Lending Momentum Index, which tracks the pace of CBRE-originated commercial loan closings in the U.S., declined by 3.0% from the second quarter and by 47.9% when compared with the strong loan volume in last year’s third quarter. The index closed Q3 2023 at a value of 187.
“While capital markets headwinds continue, we are seeing signs that lending conditions may be stabilizing for certain asset classes,” said James Millon, CBRE’s U.S. president of debt & structured finance. “Credit is gradually loosening, cap rates are resetting higher and the Fed’s rate hiking campaign may be near the end, which collectively could pave the way for an uptick in deal volume in the second half of next year.”