Experts Predict Return of CMBS Market in US

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A few years after the market for commercial-backed mortgage securities ground to a halt, property industry expert a dramatic return of the CMBS market.

CMBS issuances are expected to hit $80 billion in 2013 and rise to $100 billion in 2014, according to respondents of the Urban Land Institute's annual Emerging Trends survey.

"The return of the CMBS market is like a Biblical revival. It is back from the dead," Stephen Blank, senior resident and fellow for finance at the Urban Land Institute, told reporters.

CMBS listed at the top of the ULI and PwC study for projected changes in capital activity for 2014, up from third place a year ago. "The difference in 2014 is that providers of capital are looking to increase their allocation or are willing to look at investments that they have previously avoided," the report states.

CMBS are also performing better. Delinquency rates were down to 8.14 percent in September 2013, compared to 9.99 percent in September 2012, according to Trepp LLC.

The CMBS market peaked at about $230 billion in 2007, but was almost non-existent by 2009. But the market's "resilience" is one of the appealing aspects of the market, the report says.

Equity REITs may be among the most active CMBS borrowers, experts predict.

"Some of the credit-quality concerns that people had with real estate have evaporated with time," Mitchell Roschelle, PwC's national real estate practice leader, told Crain's New York. "We've worked through those problems, and the other thing is what used to be headwinds have changed to tailwinds, in many cases, in the eyes of real estate market participants."

The ULI study is based on a survey and interviews with more than 900 industry executives, representing different sectors.