Commercial real estate transaction activity is definitely moving in a more positive direction, as the industry is experiencing a sharp uptick in the amount of commercial and multifamily mortgage originations. This is also a great sign that credit has completely thawed from the recession, as lenders are actively underwriting commercial deals once again.
According to the Mortgage Bankers Association (MBA) Quarterly Survey, commercial and multifamily mortgage originations increased 49 percent between the third and the fourth quarters of 2012, and were also up 49 percent compared to the fourth quarter of 2011. MBA's commercial/multifamily mortgage bankers originations index shows originations for the full year 2012 were 24 percent higher than in 2011.
Jamie Woodwell, MBA's vice president of commercial real estate research, said the following about the data:"During the fourth quarter, commercial and multifamily mortgage borrowing and lending hit the highest level since 2007. Low interest rates are prompting borrowers to finance, and improving property markets are helping more deals underwrite successfully. The relative strength of commercial and multifamily mortgages as investments continues to fuel lenders' appetites."The 49 percent overall increase in commercial/multifamily lending volume, when compared to the fourth quarter of 2011, was driven by increases in originations for hotel and office properties. The increase included a 331-percent increase in the dollar volume of loans for hotel properties, a 78-percent increase for office properties, a 49-percent increase for multifamily properties, a 46-percent increase for industrial properties, a 5-percent increase in retail property loans and a 26- percent decrease in health care loans.
Among investor types, the dollar volume of loans originated for conduits for CMBSs increased by 228 percent over last year's fourth quarter. There was a 68-percent increase for commercial bank portfolio loans, a 51-percent increase for government-sponsored enterprises (or GSEs - Fannie Mae and Freddie Mac), and there was an 18-percent increase in the volume of loans originated for life insurance companies. …