A record volume of capital flowed into the commercial and multifamily real estate markets in the second quarter, reports the Mortgage Bankers Association (MBA). Commercial mortgage bankers originated $33.2 billion worth of loans during that period — a $4.9 billion increase quarter over quarter. That’s also a 54.1% jump from the first quarter of 2004.
Seasonal factors account for part of the record volume — first quarter originations typically lag second quarter volume. Doug Duncan, MBA's chief economist and senior vice president, says that 2004 is on track to exceed 2003's record origination volumes.
Multifamily remained the leading property type with 40.8% — or $13.4 billion — of total originations, according to the MBA. Office property loans totaled 24.3%, or $8 billion, and retail property loans totaled 18.1% or $6 billion.
Demand for commercial real estate remains strong despite the likelihood of a hike in interest rates in the near future. Originations for office and retail properties increased by $2.3 billion and $1.7 billion, respectively between the second quarter of 2003 and the second quarter of 2004.
Office property originations rose by 41% and retail property originations increased by 38% over the second quarter of 2003, reports the MBA. In contrast, multifamily loan originations decreased by 4% in the same time period — the second consecutive quarterly decrease.
Origination levels among investor groups, such as commercial banks, Fannie Mae/Freddie Mac, pension funds, the Federal Housing Administration (FHA) and life companies also posted increases. On the flip side, commercial mortgage-backed securities (CMBS) conduits and credit companies showed declines in origination volume.