Fitch Ratings: NOI Growth for CMBS Properties Sees Good 2022, but Slower 2023 Likely

(Philipp Birmes via

Fitch Ratings, New York, reported property-level net operating income for loans securitized within Fitch-rated U.S. multi-borrower CMBS grew 6.3% in 2022, but warned that kind of growth likely won’t be sustainable this year.

Fitch noted inflationary pressures led expenses to grow more than 9%, faster than revenue at 7.6%. That, along with recessionary pressures and other economic factors, points to an expectation of significantly slower NOI growth in 2023.

The 2022 numbers followed a strong NOI growth rate of 5.4% in 2021–although that was revised downward from an original estimate of 6.1% after more reporting came in.

“Even though this mostly benign data is only six months old, since year end, overnight rates are up an additional 75 basis points, delinquency rates have shot up 20% and we had the second- and third-largest bank failures in U.S. history, putting pressure on banks that provide the bulk of CRE financing,” said Brian Olasov, Executive Director of Financial Services Consulting with Carlton Fields, New York. “It almost feels like ancient history and the market mood has definitely darkened in the interim.” 

Olasov noted at mid-year, most analysts are flatlining NOI projections or showing negligible growth depending on property type and location.

• Fitch reported office NOI showed an average decline of 0.9% in 2022 after a 1.8% decline in 2021.
• Hotels had 18.2% average NOI growth in 2022, after 38.8% growth in 2021 as the market continues to recover from the pandemic. The sector had seen a 56% decline in 2020.
• Retail NOI grew an average of 2.9% in 2022, following 4.8% growth in 2021.
• Multifamily NOI rose 7.9% in 2022, after an increase of 4.2% in 2021.
• Industrial had NOI growth at 6.7%, up from 3.9% in 2021.
• Self-storage NOI growth was 12.5% last year, but not quite as high as 18% in 2021.

Fitch Ratings’ study includes 14,040 loans with an unpaid principal balance of approximately $307 billion across 598 Fitch-rated U.S. multi-borrower and Freddie Mac transactions issued between 1999 and 2022, which reported financials for both 2021 and 2022