Stable equity and debt availability should keep multifamily and commercial real estate originations in line with 2017’s peak, according to the Mortgage Bankers Association.
Estimates for combined commercial and multifamily mortgage lending for 2019 total $530 billion, a step up from 2018’s $526 billion and tying the all-time high of 2017. Before setting the high watermark, the previous record stood at about $508 billion in 2007.
“We expect commercial mortgage borrowing and lending to remain near current levels in the coming years,” Jamie Woodwell, the MBA’s vice president of commercial real estate research, said in a press release.
“Slowing global and domestic growth may have an impact on overall demand, but readily available equity and debt for commercial real estate should support transaction volumes. Moderation in property value growth and sustained net operating income increases will likely extend the recent plateauing in transaction activity.”
A robust fourth quarter driven by frothy lender intrigue in health care properties kept 2018’s volume inflated. Health care properties had a 61% year-over-year increase in dollar volume in the fourth quarter of 2018. Multifamily properties posted a 32% annual increase and industrial properties rose 28%.
“2018 ended on a strong note for commercial mortgage borrowing and lending, with fourth-quarter originations 14% higher than a year earlier, despite the broader market volatility. Investor and lender interest in multifamily and industrial properties continues to drive transaction volumes while questions about retail and office property markets have slowed activity for those property types. The market as a whole ended the year roughly flat compared to 2017, continuing a plateau we’ve seen in mortgage borrowing and lending since 2015,” Woodwell said.