Latest Finance Trends

Watch for CMBS lending volume to vastly improve next year and pick up even more in 2026. Borrowers will like this option as the majority of conduit deals are sized off of an interest-only debt service, which allows CMBS to offer higher proceeds. Also, most banks now demand a deposit relationship of a minimum of 10% of the loan amount, which CMBS lenders do not require. Also, CMBS lenders do not charge origination fees compared to most banks, which charge anywhere from 0.50% to 1%. Most conduit CMBS loans are interest only for some part of the term allowing additional cash flow after debt service, which is very attractive to borrowers. More

Anticipate strong demand from lenders for industrial product. Watch for them to become more creative with structure in order to compete. With a lot of industrial having been built over the past few years, lenders will focus on markets with strong occupancies and reasonable rents. Although, any property that has strong market fundamentals should receive more favorable terms on both bridge and permanent financing. More

Watch for life companies to have a huge lending appetite next year, leading to plenty of available capital. Most LCs plan to beat their 2024 allocations in 2025. Rates are expected to drop again, which will encourage borrowers to proceed with refinancing or acquisitions. This surge in transactional volume should increase life company originations. Borrowers will see higher leverage and lower debt yield minimums. Anticipate LCs to be more detailed in their underwriting and look closer at rent trends, co-tenancy and retention ratios. More

The outlook for office lending in 2025 is positive with meaningful improvements and increased liquidity. The market is starting to see some favorable trends in certain pockets relative to utilization, rents and vacancy. Watch for a flight to quality as lenders favor Class A office buildings. CMBS lenders will be active for well-performing office assets in strong markets. Banks will likely remain sidelined for the remainder of 2024 but will slowly and selectively re-enter the space in 2025 with building sales and loan sales starting to remove office loans from their balance sheets. More

Bridge capital will be one of the main sources of lending for the remainder of the year and going into 2025. There are always deals toward the end of the year that require quick-close bridge financing. Count on a very active 2025 as bridge lenders will be a strong option for ground-up construction and heavy value-add deals. Watch for more permanent lenders expanding their programs into the bridge and construction space as a way to generate extra yield. More

We asked leaders in the C-PACE field to give us their thoughts for this financing type going forward including predictions, challenges and trends.  More

The Federal Reserve recently lowered the federal funds rate by 50 basis points to a range of 4.75% to 5% and said it expects to make two additional cuts this year and four in 2025. The Fed also lowered its 2024 inflation outlook to 2.3% from 2.6% (personal consumption expenditures) and reduced its GDP growth forecast to 2% from 2.1% for the year. More

The bank construction lending market is slowly beginning to show positive signs after spending much of the year on pause. Anticipate banks to become more active participants and competitive options for construction lending in 2025. With interest rates starting to decline and the Federal Reserve likely cutting its benchmark rate, more deals will start to pencil, especially construction and construction takeouts. More

The equity investing market will continue to be slow, especially JV equity investing. Many JV investors are on the sidelines or are opting to provide pref equity instead — but with JV pricing. Investing may not return to normal levels until 2026 after rates drop, construction costs normalize and there have been more transactions in More

Look for more competition and increased flexibility for single-family rental (SFR) and build-to-rent (BTR) deals going forward. Expect overall deal volume to ramp up later this year into a strong 2025. Next year should be robust as the Federal Reserve will have begun cutting short-term rates and there will not be any election uncertainty. Rates could even start coming down as early as next month. Lenders will become less selective given the amount of dry powder raised that still needs to be deployed. More

Count on 2025 to be a record year for C-PACE financing. There will be increased demand, especially because of the disruption in the marketplace, as C-PACE can help fill the gap left behind by senior lenders. This can be used to fund new construction developments, substantial rehabilitation projects and to recapitalize recently completed projects. More More

Keep an eye out for land lending to increase by year’s end as rates decline. More lenders — especially debt funds — will be entering the market with the new year and new allocations. Banks should slowly start to re-enter the space as well. Land lending should grow around 20% in 2025. Acquisition-to-development bridge loans will be the easiest to get done going forward. Demand drivers will be key. More