Commercial/Multifamily Originations Booming And Expected To Grow In 2022

Commercial and multifamily mortgage loan originations jumped in 2021 and are expected to continue booming in 2022, the Mortgage Bankers Association (MBA) reported at its 2022 Commercial/Multifamily Finance Convention and Expo.

Originations rose 79% YOY in Q4 2021 and 44% from Q3. A preliminary measure of commercial and multifamily mortgage bankers’ originations volumes found 2021 activity to be 67% higher than 2020’s.

“The fourth quarter of 2021 was a record end to a record year of borrowing and lending backed by commercial and multifamily properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. 

“Part of the growth from 2020 was a bounce-back from the worst of the recession. However, rebounding property fundamentals and strong valuations, record sales transaction volumes, and low-interest rates all fueled commercial and multifamily borrowing and lending activity that easily outpaced previous periods.”  

Hotel (+167%), office (+122%), industrial (+113%), and retail properties (+109%) saw huge gains in originations compared to Q4 2020. Multifamily property originations rose by 57%, while health care properties saw a 17% drop compared to Q4 2020.

Industrial property originations rose 96% from Q3 2021. Hotels (+42%), offices (+39%), multifamily (+35%), retail (+6%), and health care properties (+2%) all saw increases as well.

Total commercial and multifamily mortgage borrowing and lending is expected to exceed $1 trillion for the first time ever in 2022, up 13% from 2021’s estimated volume of $900 billion.

Multifamily lending alone is expected to reach $493 billion in 2022, beating last year’s record high of $470 billion. 2023 is forecast to keep up the momentum, with just over $1 trillion in total commercial real estate lending and $474 billion in multifamily lending.     

“Commercial real estate lending volumes are closely tied to the values of the underlying properties. In 2021 those values rose by more than 20 percent, and those increases will fuel further demand for mortgage debt in the coming years,” Woodwell said.

“Continued increases in property incomes, and stability in the ways investors value those incomes, should also support solid demand for mortgage capital, even in the face of modest increases in interest rates.”