Lending Barometer: Lenders move past challenging 2023 with hope for higher originations 

Loan transactions are expected to pick up as the interest rates normalize or decrease. 

While the past year was challenging for both commercial real estate borrowers and lenders due to elevated interest rates, economic uncertainty and a widened bid-ask spread that halted market activity, market participants are looking ahead to a more active origination and sales market in 2024. 

Last year’s slowdown was reflected in Real Estate Capital USA’s lending barometer, which tracked $49.7 billion loans as of December 15, 2023. The deals included in the barometer, published weekly, were originated by all types of lenders including a majority of private credit managers across markets and sectors.  

Based on representative data collected from a total of 586 transactions, Real Estate Capital USA tracked a monthly average of 4.34 billion new commercial real estate loans, with an average loan size of around $80 million. 

The loan originations spread across multiple property sectors, with multifamily taking up the biggest portion at 44 percent. Industrial and logistics loans, meanwhile, comprised 14 percent of the total loan issuance. 


Despite the slowdown, a number of high-profile deals were completed. These include a $2.2 billion construction loan secured by a joint venture between Fontainebleau Development and Koch Real Estate for the luxury hotel Fontainebleau Las Vegas, which was the biggest transaction REC USA tracked in 2023. The mega lending deal was followed by a $947 million Freddie Mac loan secured by Prime Residential to refinance Park La Brea, an 18-building Los Angeles residential complex, and a $750 million construction loan secured by Tishman Speyer for the Harvard Enterprise Research Campus in Cambridge, Massachusetts. 

Note: The most active lenders by total loan amount were calculated based on deals where the lender served as a solo originator. The lists of active lenders excluded agency lenders such as Freddie Mac and Fannie Mae. 

The borrowing world has also seen active players who secured large loans during their 2023 activities: 

Bryan Kenny, president and principal at the California-based Bandon Capital Advisors, noted that as many traditional banks pulled back from commercial real estate lending out of caution, life insurance companies significantly increased their share of the debt market and were willing to finance emerging and special use property types such as industrial outdoor storage, gas stations, event space and other sectors that were not part of the traditional core asset classes. 

Looking ahead, Kenny said the upcoming wall of loan maturities will induce more refinancing activity in 2024. “Given elevated rates, some borrowers will have to bring cash-in to close refinances, but lenders will likely kick the can down the road rather than forcing a sale or recapitalization. Therefore, we don’t expect these maturities to fuel the purchase market significantly in 2024,” he added.  

However, the office market could see more properties being handed back to lenders or sold at deep discounts as the price discovery continues, Kenny said.  

While market participants expect to see slightly more acquisition activity and significantly more refinances in 2024 due to the wall of maturities, Kenny said lenders and borrowers would anticipate a continuation of the current “wait and see” mentality. 

“Especially in this environment, borrowers will greatly benefit from working with mortgage bankers who have relationships with a variety of capital sources and understand how to restructure deals to make them pencil,” he added. 

Similarly, lenders would also like to work with borrowers who have strong sponsorship and a track record of dealing with certain assets or markets. 

In addition, interest rates at the backdrop may also have an effective impact on the lending market. The Federal Reserve’s continued pause on rate hikes and forecast for rate cuts in 2024 have immediately affected the lending rates with a 75-basis point decline, Kenny noted. 

“This is encouraging news to borrowers and lenders that CRE lending rates are impacted by the forecast of the Fed before rate cuts actually happen,” he said, adding that the market could enjoy the relief of rate cuts ahead of the policy changes.