CRE Financing Patiently Awaits, Should the Music Stop - WMRE 2023 Midyear Outlook

Midway through the year, financial experts are still trying to understand how the U.S. banking crisis that unfolded quickly in the first few months of 2023 will play out in capital markets. Until the uncertainty clears, commercial real estate sponsors and borrowers must be patient as the pieces are reassembled in the capital markets and in the larger marketplace.

The result of the Fed changing its rate hike trajectory and investors adopting more conservative and safe strategies have caused expectations to be reset and bond yields to decline. Early in 2023, a commonly held view was that the Fed would continue hiking rates until something broke. Clearly, something did break in the banking sector. The financial crisis that unfolded in the spring of 2023 stemmed from the liquidation of Silvergate Bank, as well as subsequent collapse of Silicon Valley Bank (SVB), Signature Bank and First Republic Bank, which sent shockwaves through the ranks of the country’s local and regional banks.

While various factors played into the failures of these banks, one factor that they all had in common was increased pressure from the Fed’s interest rate hikes that began in 2022. The spate of interest rate hikes appears to be nearing a pause and the Fed has expanded its balance sheet to provide additional support to banks. But the crisis makes a soft economic landing even more unlikely, and many experts believe a recession is unavoidable.

Banks are seeking to boost liquidity by asking for greater depositor relationships. Because the largest banks saw a major inflow of deposits following the regional bank failures, many lenders are willing to give better rates to borrowers who provide meaningful deposits. There are also numerous lenders shifting resources from originations to asset management. Banks are also sharply reducing lending levels and are expected to be even more cautious about future loans.

by Adam S. Finkel | Principal and Co-founder of Tower Capital

As seen on WMRE | Read Full Article

more news & insights

Dallas Business Journal| Jan 28 2025
Financing secured for new townhome community in Melissa
Bisnow| Jan 27 2025
This Week's Dallas-Fort Worth Deal Sheet
RENTV.com| Jan 25 2025
RENTV.com - Commercial real estate news and property information
Multi-Housing News| Jan 23 2025
Tower Capital Arranges $100M in BTR Financing
1 2 3 40

Scottsdale

15333 N. Pima Road
Suite 375
Scottsdale, AZ 85260
480-426-0560
AZ CMB-0928926

Dallas

2626 Cole Ave
Suite 300
Dallas, TX 75204
214-661-7633

Los Angeles

1801 Century Park East
24th & 25th Floors
Los Angeles, CA 90067
323-923-6032
CA DRE-02237859
Copyright © 2025 All Rights Reserved Tower Capital | Website Developed by Connect Creative
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram