CRE Executive Perspectives: Looking Back at 2024
(l. to r.: MBA’s 2025 Chair-elect Christine Chandler, Jeffrey Majewski, Hilary Branson Provinse, Wallace Reid)
SAN DIEGO–Looking at it in the rear-view mirror, 2024 seems like two very different environments, senior executives said here at MBA’s Commercial/Multifamily Finance Convention and Expo Tuesday.
“Looking back, I would describe 2024 as two completely different halves,” said Jeffrey Majewski, Executive Managing Director with CBRE Capital Markets. “The second half of the year was dramatically different from the first half of the year. We all, from a commercial standpoint, got busy in the second half of 2024, helped, of course, by interest rate decreases in August and September. I wish that it would have been a little bit more steady throughout the entire 12 months.”
Majewski noted that CBRE refreshes forecasts every month, “and they keep track of whether or not you hit your forecast from the prior month,’ he said. “We kept saying, ‘it’s going to happen.’ ‘it’s going to happen in the second half of the year.’ And we actually did deliver.”
Hilary Branson Provinse, Executive Vice President, Production and Capital Markets with Berkadia, noted significant volatility in 2024. “I think what we were all seeing with our staffs was that we all have several business lines, so people were looking at it, asking, ‘Is this a sale?’ ‘Is it a refinance?’ ‘Is it a recap?’ And you were kind of running all three at the same time. Then the sponsor would decide which direction they wanted to go. You had things waiting in the pipe. Then, when we saw the interest rates plummet in August, I think we probably locked 50% of our deals within four weeks.”
“So it ended up being a great year, but it was a bumpy ride,” Branson Provinse said.
Majewski said August proved his thesis that as soon as rates got to a point where borrowers wanted to execute, they would lock. “That’s what we kept saying internally,” he said. “We’re all tracking billions and billions and billions of dollars, especially on the agency front, on the multifamily front, waiting for that rate to get to the point where you could call and say ‘We’re there!’ Then it was almost like you could open the top drawer, pull it out and start locking. And we all did, and that helped us in Q4.”
Wallace Reid, Senior Managing Director, Capital Markets Debt Platform Leader with JLL Capital Markets, said his firm examined what happened to applications during the rate drop. “The longest quoted deal was 416 days, and most of the quotes were over 30 days outstanding when people jumped. About 40% of the deals were quoted in two days. People said, ‘Rates are low. I want to go’.”
Reid noted the agencies have to wait three days before they can re-quote. “So, if you got it quoted on a Monday and rates were dropping suddenly, you couldn’t get a re-quote from the agencies for three more days. It was amazing to watch people that have been sitting on the sidelines forever start to freak out over 24 hours,” he said. “What helped–at least from a multifamily standpoint–was fundamentals. When you look at rent growth and NOI growth, it didn’t negatively impact them to wait until rates dropped to the point where they were comfortable and executed.”
