• CRE Daily
  • Posts
  • Industrial Loans Surge in Q1, Defying Wider Borrowing Slowdown

Industrial Loans Surge in Q1, Defying Wider Borrowing Slowdown

Lending on industrial properties surged in Q1, while most other property types saw declines.

Together with

Good morning. Industrial property loans surged nationwide at the start of the year, while originations in other CRE sectors, including office, healthcare, and multifamily, remained muted.

Today’s issue is brought to you by Viking Capital.

Market Snapshot

S&P 500
GSPC
5,221.42
Pct Chg:
-0.024%
FTSE NAREIT
FNER
713.60
Pct Chg:
+0.41%
10Y Treasury
TNX
4.475%
Pct Chg:
-0.016
SOFR
1-month
5.32%
Pct Chg:
0.0%
*Data as of 5/13/2024 market close.

LENDING MARKET

Industrial Loans Surge in Q1, Defying Wider Borrowing Slowdown

Commercial and multifamily borrowing started slowly this year, similar to last, with only industrial property loans showing a significant increase from 2023.

Bright spot: According to a recent Mortgage Bankers Association report, industrial loans saw a remarkable 63% jump in dollar volume YoY, while hospitality loans were up 8%. Blackstone-affiliated borrowers drove over $7B in industrial refinancing activity in 1Q24. Renewed demand for industrial space is driven in part by higher consumer goods spending as inflation cools down.

Sector challenges: Conversely, the broader market faced several headwinds. Retail loans declined with a 31% drop, followed by healthcare at 22% and office properties at 21%. Multifamily properties also recorded a slight decrease of 7%. High interest rates and market uncertainty have left many property owners hesitant to commit to new sales or refinancing, keeping activity muted.

Lender landscape: While traditional lenders like banks reported 41% less loan volume YoY, notable decreases were also observed in government-backed entities like Fannie Mae and Freddie Mac. On the flip side, nonbank lenders and life insurance companies ramped up their lending by 41% and 35%, respectively, and CMBS markets saw a 93% increase in activity.

➥ THE TAKEAWAY

What they are saying: Jamie Woodwell, MBA’s head of commercial real estate research, said in a statement. “With loan maturities and other triggers increasingly likely to prompt action, property owners, potential owners, lenders, and others are all working through the specifics of each individual property to identify the level of mortgage debt that property can support,” Woodwell said. “New loan originations should follow as this continues.”

TOGETHER WITH VIKING CAPITAL

2x Equity Multiple Investment Opportunity

Introducing the Villas at Sundance, a premier 252-unit multifamily gem in New Braunfels, Texas. Built in 2012, this asset offers a a strong investment opportunity in the bustling Texas Innovation Corridor, strategically located between Austin and San Antonio.

Why Villas at Sundance?

🏡 Prime Location: New Braunfels is the "Third Fastest Growing City in the Country," boasting a staggering 40% population growth in just five years.

📈 High Occupancy: The New Braunfels submarket boasts the highest occupancy in the Austin-San Antonio MSA, ensuring consistent returns on your investment.

💰 Exceptional Value: Viking Capital secured this asset at a significant discount, leveraging the city's growth and low-cost basis to offer investors an unparalleled opportunity.


✍️ Editor’s Picks

  • Waiting game: The Fed anticipates cutting interest rates but is awaiting a housing cost slowdown to meet its 2% inflation target despite a 1.5-year delay.

  • Power struggle: Georgia faces an impending power crunch as tech companies flock in, challenging the state’s green goals as utilities push gas to meet surging demand.

  • Doubling down: Deer Park Road Management, which made a killing on discount mortgages in 2008, plans to capitalize on low prices in the residential mortgage market.

  • Taxing times: San Francisco officials are planning a business tax reform initiative to diversify the city’s tax base and boost recovery.

  • Debt dilemma: Fed warns of rising delinquencies in CRE loans, with rates surpassing pre-pandemic levels, signaling more losses.

  • Condo chaos: A New Florida law triggers statewide condo market turmoil with a $30M assessment shock, leading to price declines.

  • Tax bill: Trump faces a potential $100M tax bill due to an IRS dispute over Chicago tower losses.

  • Maturity crunch: $62B in CMBS SASB loans are set to mature this year, with rising defaults projected amid declining payoff rates.

🏘️ MULTIFAMILY

  • Deal of the day: Bell Partners acquired the 492-unit Silverado Apartment Homes in Murrieta, CA, for $146.5M on behalf of Value Add Fund VIII.

  • On the rise: Secondary markets in the Midwest, Northeast, and South are seeing increased apartment asking rates, with cities like Albany and Milwaukee reporting over 2% growth.

  • If it ain’t broke: Wisconsin's Continental Properties closes its 10th Illinois acquisition at $78.35M for a 284-unit Plainfield complex, or $275,880 per unit.

  • Dream deferred: AvalonBay Communities (AVB) reported 4.2% higher Q1 revenue at $669M, driven by high home costs and limited supply, keeping the American Dream out of reach for most.

  • Artistic oasis: San Francisco residents can finally be thankful for something as $100M from an anonymous benefactor will end up funding 100 affordable housing units for artists in the city.

🏭 Industrial

  • Data debut: Tishman Speyer (TSIB) ventures into data centers with an initial Frankfurt project, starting at 32 MW but potentially expanding to 70 MW.

  • In the name of industry: The US industrial real estate market reported $9.97B in 1Q24 sales, although some big moves by Amazon on the West Coast slightly skewed results.

  • Power moves: Redfearn Capital and TPG Angelo Gordon bought an 8-building Jacksonville industrial portfolio, 91% occupied by 18 tenants, for $47.8M.

🏬 RETAIL

  • E-commerce evolution: E-commerce spending in 2024 is up 7% to $331.6B, driven by budget-conscious consumers and buy-now-pay-later plans.

  • Mixed-use moves: Kushner Cos. secured $100M in loans for a Long Branch project, accelerating its Monmouth County expansion in the revitalized waterfront.

  • Foot traffic figures: Q1 multi-tenant retail investment sales grew by 7.8% from the previous quarter but were down 18% YoY as average shopping center cap rates hit their highest since mid-2014.

  • Rethinking sports: Sports and entertainment venues are enhancing retail by increasing foot traffic and providing diverse consumer experiences like pickleball, gaming, and music.

🏢 OFFICE

  • Skyscraper steal: In one of the best deals of the year, Fort Worth's tallest building, Burnett Plaza, sold at auction for just $12PSF, less than 1% of its previous sale price.

  • In a lot of trouble: Fitch Ratings may downgrade Mount Street's U.S. special servicing arm due to transparency concerns in the firm’s loan workout processes.

  • Green innovation: Howard Hughes' (HHH) eco-friendly office building, One Bridgeland Green, will anchor the town center of Bridgeland, with low submarket occupancy.

🏨 HOSPITALITY

  • Financing fortunes: Miami-based firm Driftwood Capital provided $30M in mezzanine financing for the largest hotel in Texas as part of a $300M refinancing package.

📈 CHART OF THE DAY

CoStar’s multifamily value-weighted repeat-sale index has been growing steadily since 1996 but is currently in the middle of its biggest spike and pullback since the GFC. Currently, the index is below the long-term trendline and has fallen back down to late-2021 levels.


Share CRE Daily + Earn Rewards

You currently have 0 referrals, only 1 away from receiving B.O.T.N Multifamily Deal Screener .

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

Join the conversation

or to participate.