A somber portrait of the state of U.S. capital markets and their impact on CRE emerges from Newmark's second quarter Capital Report. It depicts a landscape of low loan originations, fewer lenders, underwater loans, troubled debt about to mature, and rising cap rates across a wide swath of the CRE spectrum.

Loans are hard to get in this new world. CRE debt origination is down 52% in 1H 2023 compared to the prior year and 31% compared to before the pandemic. Equally concerning, there are 32% fewer active lenders in the market today compared to a year ago. "The small and regional bank lending engine that has driven the CRE market is rapidly slowing with no clear replacement," the report noted. 

And this is affecting the entire banking industry, not just regional banks. All property types and lending sectors are affected, "though office, debt funds and CMBS/CRE CLOs (commercial real estate collateralized loan obligations) are negative outliers." Loan originations are down most dramatically for multifamily.