Three new cities representing traditionally smaller markets have jumped into the top five list of CMBS issuers during the first half of this year, knocking off mainstay Chicago, Illinois, among others.
An analysis of data provided by research firm Trepp shows that the top two cities for CMBS issuance during H1 2015 were New York and Houston, Texas, with $7.5bn and $2.2bn in issuance, respectively. They were followed by new entrants Las Vegas, Nevada ($1.09bn); Phoenix, Arizona ($607m); and Orlando, Florida ($555m).
Orlando made the list thanks to $431m in CMBS loans tied to two hotel properties: the JW Marriott Orlando and Ritz Carlton Orlando at Grande Lakes. Las Vegas jumped to the #3 spot partially due to $875m in loans secured by the Cosmopolitan Las Vegas hotel property.
Those that dropped off the list from the first half of last year were Miami Beach, Florida; Atlanta, Georgia; and Chicago. Notably, Chicago had made the H1 lineup since 2011.
Issuance from the top five cities this year jumped 46 percent to $12bn from $8.2bn in the same period last year, thanks to a market-wide jump. Most experts agree that US CMBS issuance will surpass the triple-digit mark by year end.
Houston clocked a nearly 300 percent increase in volume over the same period last year. Houston Galleria, the largest mall in the country, received $1.05bn in refinancing in March this year, nearly half of that city’s $2.2bn in issuance.
“There has been a lot of building activity in Houston particularly in the multi-family sector, their second most popular sector in terms of issuance,” said Sean Barrie, a research analyst with Trepp. “It has become one of the largest markets in the country and some pretty huge properties landed sizable loans.”
New York continues to lead the tally with total issuance of about $7.5b during the first half of 2015, up 32 percent from the same period last year. Three of the top 10 biggest CMBS deals this year are tied to New York, including office properties at 200 Park Avenue and 3 Bryant Park, with loans worth $1.4bn and $1.12bn, respectively, according to Trepp data.
New York office CMBS loans grew only marginally during H1 to $4.6bn from $4.5bn during the same period last year, but lenders are diversifying into lodging and retail properties. Retail volume jumped to $1.6bn from $53m last year, a threefold increase, thanks in part to the $1.25bn loan tied to Saks Fifth Avenue building property.
“Retail and lodging are two of the best performing property types that we have noticed,” Barrie said. “There could be a more renewed focus this year for lenders in the city to dish out some more money here, given the robust property fundamentals.”