Commercial Development News - Appraisal Development International

Commercial Mortgage Volume Picking Up, Particularly for Office Properties
By Mark Heschmeyer
CoStar Group
Published: Aug 4, 2010

Second-quarter 2010 commercial and multifamily mortgage loan originations were 1% higher than during the same period last year and 35% higher than during the first quarter, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

The 1% overall increase in commercial/multifamily lending activity during the second quarter was driven by increases in originations for office and industrial properties.

Loans for industrial properties increased 183% compared to the second quarter of 2009, 180% for loans on office properties and 18% for loans on hotel properties. Health-care properties saw a 76% decrease in loans, multifamily property loans fell 25% and retail loans decreased 9%.

Among investor types, loans for conduits for CMBS saw an increase of 173% compared to last year's second quarter. There was also a 148% increase in loans for life insurance companies and a 12% decrease in loans for commercial bank portfolios. The dollar volume of loans for government-sponsored enterprises (GSEs) including Fannie Mae and Freddie Mac saw a decrease of 55%.

"Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to," said Jamie Woodwell, MBA's vice president of commercial real estate research. "Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."