MBA CREF 2025: Healing Markets, Ready Capital and a Resilient Economy

By Robert Slatt, Principal

It’s always good to start the year with frank discussions amongst commercial lending peers and partners reflecting on the year past, reviewing the economic landscape of now, and charting a course for commercial mortgage and debt strategy in the year ahead. At this year’s MBA CREF 2025 conference held February 9 -12, optimism reigned from a far healthier CRE debt market, with animated discussions on the new administration and the subsequent opportunities and uncertainties in equal measure. Here’s a quick take on the key themes:

1. “Stay alive until 25” is transitioning to “Maturities arrive in 25.” The MBA reported $957 billion of commercial and multifamily loans maturing this year. This sizable wave of pending maturities is inflated by the many extensions granted in 2024 and 2023.

2. We are seeing an abundance of capital sources with ready capital to deploy. Insurance companies remain active and committed to their CRE programs. Banks are getting back into the market. CMBS is definitely a viable source of financing for larger transactions. Agencies will remain a great source for multifamily, especially in secondary and tertiary markets. Debt funds and private capital are active and growing in numbers. Pricing is competitive and there is no shortage of capital.

3. The 10-Year at 4.5% will be this year's baseline. Expect it to fluctuate in both directions between 4.0% and 4.9%. We will most likely only see one 25 bps cut from the Federal Reserve later this year if current conditions and forecasts hold. 

4. If the 10-year hovers closer to 4%, we expect to see more investment sales, which would lead to an increase in acquisition financing. However, if the rate moves closer to 5%, we expect to see a continued stall in new investment sales and some distress.

5. Timing will be everything in 2025 to optimize rate. Insurance company forward rate lock at application will be an advantage when yields dip, volatility and movement will have to remain a concern for borrowers in other financing structures. 

6. The MBA has strong connections to the new administration’s FHFA (nominee) and HUD leadership, and there is an expectation that there will be renewed focus on opportunity zones in broader federal policy initiatives.

7. It is still too early to predict where overall Federal policy is heading long term. Expect a clearer picture by spring or early summer. A significant push towards return to office at all levels of government is a welcomed move, that in tandem with similar calls from the private sector should improve office performance.

8. Don't expect Fannie/Freddie to privatize this year, although there is a good chance we will see a clearer roadmap emerge by 2026. There is significant focus on how the conservatorship will end, and too many details for it to happen quickly. There will be a need to differentiate between single family and commercial in the process.

9. Tariff's, materials costs, construction labor/immigration, inflation, and natural disaster recovery are broad areas impacted by evolving policy that will be important for CRE professionals to monitor in 2025. Especially for those in new development.

10. Insurance is going to continue to be a challenge for CRE. Liability and property coverage is hammering NOI on stable assets and a drag on new development.

11. Barring unforeseen disruption, this year's macroeconomic conditions should be steadier and more predictable, supporting healthy CRE markets including a steady improvement of office fundamentals in an already improving climate.