Bank lending for commercial real estate fell from the second quarter to the third quarter of 2023 from $175 million to $164 million, or 7%. The total volume of loans in 3Q 2023 plummeted 49% compared to 3Q 2022 when loan originations totaled $321 million. The losses affected every sector and every type of investor in the CRE market.

The data is presented in a report from the Mortgage Bankers Association. Borrowing is not likely to improve until clarity about properties' fundamentals, certainty about property values and stable interest rates is achieved, said Jamie Woodwell, MBA's head of CRE research. Year-to-date borrowing has dropped 44%.

"Borrowing and lending were down for every property type and capital source from one year ago," he noted. Compared to 3Q 2022, the dollar volume of loans in 3Q 2023 for healthcare properties slumped 76%, for hotel properties 52%, for retail 51%, for multifamily 50%, for offices 49%, and for industrial 35%.