With 2019 CMBS issuance of $97.8 billion surpassing estimates by a wide margin, CMBS pros are projecting 2020 will surpass $100 billion, making 2020 the busiest year since the financial crisis. With interest rates projected to remain near rock bottom for the foreseeable future, it’s widely believed that CMBS lenders will continue to see heavy demand for debt to refinance commercial properties and fund acquisitions, at least for the next six months or so.
According to a panel of industry professionals surveyed by Commercial Mortgage Alert, the average prediction for 2020 is $103 billion. Predictions ranged from a low of $90 billion to a high of $140 billion. Senior Portfolio Manager Leo Huang of Ellington Management was the most bullish about U.S. activity. “Loan coupons are at historical lows, property transaction flows remain active and issuers will do bigger deals,” he said. “I expect significantly more volume in 2020 as CMBS lenders gain market share from other types of lenders.”
After getting off to a slow start last year, CMBS issuance soared in the second half of 2019 as plunging interest rates led to a dramatic increase in commercial property refinancings and purchases. The origination of giant fixed-rate mortgages was especially strong, boosting issuance of single-borrower transactions.