Finance  ·  Analysis

Berkadia Study Argues CRE Lending Hasn’t Dried Up for Multifamily

Data from the Federal Reserve and Real Capital Analytics indicates multifamily loans continue to be made


Following three bank failures this spring, the general thesis among economists has been that commercial real estate has experienced a broad pullback in lending in 2023 — but not when it comes to one of the darlings of asset classes, says a team of capital markets experts at Berkadia

A review of commercial real estate loan data from the Federal Reserve and Real Capital Analytics found that multifamily lending in 2023 has remained steady relative to 2016 levels, and that smaller commercial banks are driving positive CRE lending activity across the country, as opposed to the nation’s 25 largest banks. 

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“My initial hypothesis was we’d see a supreme dry-up in bank lending, and that just didn’t materialize,” said Josh Bodin, senior vice president of securities trading at Berkadia, and one of the authors of the report. “While we’re seeing caution in bank lending, the second quarter supported the idea that there wasn’t nearly as much pullback as we thought there’d be.” 

While lending activity began to slow as interest rates increased last year, Bodin said initial data indicated CRE lending had dried up even further across the board following the spring credit crisis, which saw Silicon Valley Bank (SIVBQ) (SVB), Signature Bank (SBNY), and First Republic Bank (FRCB) collapse over a seven-week period. He noted that the Federal Reserve’s Beige Book of May 2023 concluded that “significant volume declines continue to be seen in commercial and industrial and commercial real estate lending,” while 48 percent of bankers in a survey conducted by the Federal Reserve Bank of Dallas admitted to using tighter credit standards and terms in the spring. 

But, when it comes to multifamily lending, those findings weren’t backed up by the data, Bodin said. 

“Certainly, post-SVB, there’s been this narrative that banks are not lending, that’s it’s incredibly hard to get a loan, and the tighter credit standards from banks should have critical knockoff effective on CRE,” explained Bodin. “But when we started to piece through the data … we couldn’t actually find significant supportive data to show there was a pullback of bank lending [in multifamily].”  

Bodin cited a number of points that supported his team’s conclusions. 

First, the Federal Reserve’s senior loan officer opinion survey from the second quarter found that credit standards were tightening across the board “well in advance” of the collapse of Silicon Valley Bank on March 10. Second, Real Capital Analytics’ review of apartment deal volume exclusively examining the multifamily sector found that bank transaction volume in 2023 stood at 7.3 percent, just slightly below the average of 7.9 percent that has held the line since 2016. 

Perhaps most importantly, Federal Reserve H8 data — which examines the assets and liabilities of U.S. commercial banks — found that bank lending since May has been only “marginally lighter than before the regional banking crisis” for all asset classes, with smaller banks — those outside the 25 largest financial institutions in the U.S. — performing a majority of CRE lending.   

“With exception to what happened in four weeks after Silicon Valley Bank, the remainder of the data has been largely accretive to bank balance sheets,” said Bodin. “The larger banks have had more net negative lending than the smaller regional banks. … Smaller banks have been driving the positive activity of the lending volume.”    

Banks outside the top 25 largest designation hold approximately 69 percent of commercial real estate loans originated by banks in the U.S., according to the Federal Reserve. 

Bodin did caution that there could be a lag in the lending pipeline for all asset classes, and that the data for 2023 lending patterns might need a few more months to provide a full picture of the lending and quoting landscape. 

“It does take time for the pipeline to clear, usually 60 to 180 days,” Bodin said. “Post-SVB, you’d still see the lag in the data before the net lending coming out of banks starts to drive up.”  

He added that the quotes Berkadia professionals are now seeing would lead them to believe there’d be lighter liquidity from banks in the third and fourth quarters of 2023. 

“We could be at that inflection point, when we start to see lower lending volume coming from banks,” he noted.  

Brian Pascus can be reached at