CMBS Issuance Surges as Investors Bet Big on 2025
CMBS issuance soared 150% YoY to $115B in 2024, and strong demand is expected in 2025.
Jordan B. & Han-Gwon Lung
February 19, 2025
Good morning. CMBS issuance soared 150% YoY to $115B in 2024, and strong demand is expected in 2025 as investors favor multifamily, industrial, and prime office assets despite sector distress.
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Market Snapshot
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*Data as of 02/18/2024 market close.
ON THE RISE
CMBS Issuance is Ready to Reach New Heights in 2025
A record-breaking year for CMBS signals renewed investor confidence, even as distress lingers in parts of the market.
A new high: CMBS issuance surged to $115B last year, a 150% jump from 2023, per Kroll Bond Rating Agency. The second half saw explosive growth—15 single-borrower CMBS loans over $1B closed in October alone, compared to just four in all of 2023.
Investor demand is back: Public debt markets are heating up as investors flock to high-performing assets like top-tier office buildings. Lenders and sellers have adjusted to persistently high interest rates, fueling more deal activity.
“Buyers are still active, and they want to be in this market today,” said Aaron Jodka, director of research for U.S. capital markets at Colliers. “They see today as a very attractive acquisition time, and sellers have come around to the concept of higher-for-longer interest rates. They’re no longer waiting.”
Different loan composition: SASB loans surged to 45% of CMBS issuance in 2024, more than doubling from 2023, as investors favored single-borrower deals. Conduit loans also gained traction, reaching 30% of volume, while agency-backed loans from Fannie Mae and Freddie Mac plummeted to 26%, down from their dominant share the year before.
Office CMBS: Despite ongoing struggles in the office sector, high-quality properties are still securing financing. Major deals in New York City—such as a $3.5 billion SASB loan for Rockefeller Center and a $1.2 billion loan for the Seagram Building—highlight investor interest in well-located, financially stable assets.
The HOT new trend: With long-term rate uncertainty, owners are leaning into shorter loan terms. Nearly 70% of CMBS conduit deals in 2024 were structured as five-year loans, up from 42% in 2023. However, this shift has pushed up borrowing costs relative to 10-year loans.
➥ THE TAKEAWAY
What's up next? New issuances are booming, but distress is climbing, particularly in the office sector. Investors are chasing quality deals, while struggling assets face mounting headwinds. With banks pulling back on extend-and-pretend tactics, 2025 could bring more loan restructurings—and opportunities—for those willing to navigate the turbulence.
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✍️ Editor’s Picks
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Join the Best in CRE: Best Ever Conference attendees represent $50B in assets and $400M in unplaced capital. Meet them March 3-5. Use code credaily25 for 25% off. (sponsored)
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M&A expansion: Barings is acquiring Artemis Real Estate Partners to enhance its US real estate platform, adding $11B in AUM and expanding investment capabilities across various property sectors.
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Cautious stance: Federal Reserve Governor Michelle Bowman stressed the need for further inflation progress before considering more rate cuts, signaling a slower disinflation process.
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Tops for job growth: Stockton-Lodi, CA leads job growth nationwide at 5.5%, followed by Boise City, ID, and Richmond, VA, with shifting job momentum signaling expansion opportunities.
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Follow the lawyers: The Grove Mall owner sued to block the $1B Television City modernization, citing environmental and community concerns over traffic and unclear project impacts.
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Feeling lucky? A BofA survey revealed that investors are the most risk-on they’ve been since 2010, with cash levels at a low and a preference for global stocks, especially European over US tech.
🏘️ MULTIFAMILY
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BTR slowdown: Rising construction costs and financing challenges have led to a slowdown in the Texas built-to-rent market, with new construction starts dropping by over 50% in 2024.
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Low confidence: Multifamily construction remains slow as supply-chain issues and high interest rates keep builder confidence below the breakeven point, despite strong occupancy rates.
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Sustainability record: Alloy Development's 63-story Brooklyn rental tower, designed to meet passive house standards, will be the world's tallest of its kind, focusing on energy efficiency.
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Midwest moves: Summit Equity Group purchased the 222-unit Federal Hill Apartments in Noblesville, IN, from Old Town Companies, the latest acquisition in the region.
🏭 Industrial
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Data center evolution: The surge in AI demand is transforming data centers, with proptech firms leveraging generative AI to remotely manage operations and address energy challenges.
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Riverfront revitalization: Richmond’s James River, once polluted by local factories, is seeing improvements as new developments like the Allianz Amphitheater continue to reshape the area.
🏬 RETAIL
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Closures surge: Over 9.9K stores closed in 2024, creating 140 MSF of available retail space, with experience-driven tenants like food, fitness, and healthcare leading new leases.
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Eyeing retail: Flush with cash from loan payoffs, Blackstone Mortgage Trust (BXMT) is targeting net-lease retail properties, focusing on essential retail and long-term credit investments.
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Pennsylvania deal: Agora Commercial Realty Advisors acquired the 147.9 KSF Summerdale Plaza in Enola, PA, for $15.15M, with the property nearly 81% occupied at the time of sale.
🏢 OFFICE
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McKinsey warning: Office space demand may not recover for decades, according to McKinsey, with values projected to drop 26% by 2030 as hybrid work reduces long-term occupancy needs.
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Loan extension: Blackstone (BX) secured a three-year extension on its $1.3B CMBS loan for Chicago’s Willis Tower, reinforcing confidence in the property amid ongoing leasing activity.
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Still Rome: Trading firm Jane Street added 400 KSF at 250 Vesey Street, bringing its footprint to nearly 1 MSF, signaling strong demand in Manhattan's office market.
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Hitting the market: AEW Capital Management is selling the 16-story office building at 525 W. Van Buren St., adding to Chicago’s wave of high-vacancy office properties hitting the market.
🏨 HOSPITALITY
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Consolidating hotels: IHG is acquiring Ruby Hotel Group for $116M, adding 20 European properties while planning for global expansion, particularly in the US and Asia.
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Investment surges: A CBRE survey showed that 94% of hotel investors plan to maintain or expand holdings in 2025, driven by supply constraints, rising RevPAR, and demand for high-end and resort properties.
📈 CHART OF THE DAY
Big apartment REITs are increasing development, aiming to deliver new units in 2026-27—but this isn’t a sign of a broader rebound in apartment starts.
According to Jay Parsons, REITs accounted for just 2.6% of all U.S. apartment starts in 2024, up from 0.5% in 2023—a 10-year high but still a small share of total development.
Their presence may grow in 2025, but most developers remain sidelined due to funding challenges.
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