Published on Wednesday, February 21, 2024

Its ‘Momentum Index’ increased by 1% from Q3 2023—the first quarterly rise since Q1 2022.


There are signs of stabilization in the commercial real estate lending market, according to CBRE.

It reported that at the end of 2023, borrowing costs appeared 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 US, increased by 1% from Q3 2023—marking the first quarterly increase since Q1 2022.

The index still saw a decline of 38.1% compared to the strong loan volume of Q4 2022.

“We are seeing more constructive lending conditions for specific asset classes,” James Millon, US President of Debt & Structured Finance for CBRE, said in prepared remarks.

“We are experiencing a material decline in credit spreads in the liquid markets, lower trading band for benchmarks, and a reset of cap rates at higher levels.

“Additionally, as the Federal Reserve has indicated interest rate cuts on the horizon, these factors combined have created a more favorable transactional environment in the first quarter.”

Others in the CRE community, however, disagree with CBRE’s prognosis. The CRE capital markets have many well known issues that will make borrowing difficult in the year ahead, these experts say.

“The lending market is far from stable,” David Frosh, CEO of Fidelity Bancorp Funding, tells even though interest rates have stabilized. “The 3% to 4% loans coming due total more than $1 trillion. New financing will most likely be in the high 5% to mid-6% range and loan-to-values (LTV) will be lower.

“These loans are upside down and it is going to create a huge problem for banks and investors.”

Frosh also said no one is talking about private credit and that it is a fragmented and unregulated business.

“Many have loans sitting on their books at 75% LTV with limited options for getting paid back,” he said. “At the same time, money is flowing into private credit at a huge rate because banks are not lending.”

Peter Ciganik, Partner and Head of Capital Markets at GTIS Partners, also points to the hundreds of billions of CRE loans maturing over the next three years under duress.

“With lower LTVs and the dramatic reduction in bank lending, even well-performing assets are turning to the alternative lending market as they come up short in refinancing proceeds or need capital to finance asset improvements and construction costs,” Ciganik tells

“For the next several years, we expect an opportunity to originate high-yield credit at equity-like returns but better risk and collateral safety, as the liquidity crunch precipitated by last year’s bank failures affects broad swaths of commercial real estate.”

Himanshu Tiwari, senior underwriter with Parkview Financial, tells that while banks are still lending – although selectively due to an eroding deposit base and enhanced regulatory oversight – filling the void created by the CMBS markets and alternative lenders from the highs of 2021 and 2022 is proving difficult.

“Banks have limited ability to refinance these deals due to higher capital provisioning requirements while alternative lenders are still treading cautiously before deploying their dry powder.”