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Jan 3, 2023

A Dive into What’s Impacting Commercial, Multifamily Real Estate Finance Today

By Troy Marek

With 2023 here, all eyes are on the U.S. economy, with anticipation of what’s to come. Inflation and rising interest rates have captured everyone’s attention as we witness an evolving commercial real estate landscape. For the first time in a long while, the industry is experiencing a recalibration impacting both the cost of debt and the pricing of multifamily and commercial properties. Buyers are unable to pay what they could several months ago for assets and must now be prepared to bring additional equity to their deals.

Much of what is occurring may simply be viewed as a type of normalization, or leveling off, after a long period of growth and inexpensive debt. A recent Mortgage Bankers Association’s (MBA) commercial and multifamily lending forecast for 2022 reflects this. The MBA’s predictions included a total annual 2022 commercial and multifamily borrowing and lending decline to $766 billion, representing a 14% decrease from the $891 billion 2021 totals. MBA predicted multifamily lending activity will drop to $455 billion in 2022, which, if confirmed at year-end, is a 7% decline from 2021’s record $487 billion in activity.[i]  As a point of reference, MBA reported $441.5 billion in commercial and multifamily mortgages closed in 2020 and $601 billion closed in pre-pandemic 2019.[ii]

For those seeking to finance multifamily properties (whether affordable, workforce or market rate), the FHFA’s annual volume caps for multifamily loan purchases of Fannie Mae and Freddie Mac are particularly consequential as they are direct indicators of loan deal volume. FHFA designated its 2023 caps at $75 billion for each agency, or a total of $150 billion. In somewhat positive news for apartment property owners, this is notably just a slim decline from 2022’s $78 billion cap for each agency, or $156 billion total.

Banks, which are experienced in working with borrowers in varying economic conditions, are addressing current dynamics with closer scrutiny on credit decisions and an increased focus on the soundness and sustainability of the operations for which they are providing financing. Federal regulators have also been watching bank commercial real estate loan portfolios more closely, especially those comprised of loans on riskier assets or those with payments vulnerable to rising rates.

All of these dynamics will bear implications for those currently seeking financing, or those who plan to source it in coming months. Liquidity remains in the market, however transactions are happening at a slower pace than in recent years and, unsurprisingly, the finance process has become more detailed for borrowers. What resonates today is the importance of commercial real estate owners working with seasoned finance professionals.

Borrowers applying for loans should anticipate their creditworthiness, as well as property and deal specifics, will be evaluated more closely. An owner’s track record of success is also now increasingly important to lenders. Borrowers can expect the economic uncertainty, which is currently making the finance process more cumbersome, to continue for some months ahead. The ultimate hope is that the Fed gets inflation under control and that the slowdown isn’t prolonged.

About the Author

Troy Marek is head of Real Estate Capital Markets for Regions Bank and leads Sabal Capital Partners, LLC, a wholly owned subsidiary of Regions Bank and a national commercial and multifamily real estate lender. Visit

[i] Mortgage Bankers Association, Commercial/Multifamily Lending Expected to Fall in 2022 Due to Ongoing Economic Uncertainty, October 3, 2022,

[ii] Mortgage Bankers Association, Commercial and Multifamily Mortgage Bankers Originated $441.5 Billion in 2020, April 15, 2021,