CREJ - Office Properties Quarterly - January 2015
As we approach the start of 2015, the overall health of the commercial real estate financing market continues to show significant improvements and recovery from the downturn experienced in 2009, which was the low point in the cycle with only $83 billion of originations. 2013 total originations surpassed $350 billion, and so far year-to-date 2014 originations are up 5 percent from the same period in 2013. Although originations are still well behind the peak of $510 billion reached in 2007, the trends over the last three years are extremely positive and provide the needed liquidity to support strong growth for commercial real estate. Most importantly, debt is available from a magnitude of sources, including life insurance companies, commercial mortgage-backed securities lenders, banks and bridge lenders. Additionally, financing for office properties is readily available from all these groups and as an asset class has witnessed the second-highest volume behind multifamily. Additional comfort can be found in the fact that current origination volumes are in line with the amount of current and future maturing debt levels. Annual maturing debt levels for the next three years are approximately $350 billion each, which is in line with 2013 and expected 2014 total originations. The concern of the wave of maturing debt and inability to refinance in 2009-2010 was greatly mitigated by recent origination volumes and the fact that most investors are injecting more equity into properties instead of leveraging to the levels experienced in 2006-2007.