U.S. CMBS 2023 Outlook

This commentary highlights our view that the new issuance slowdown that began in 2022 is likely to persist into 2023, sustained by higher interest rates, capital markets volatility, and DBRS Morningstar's weak GDP growth expectation of 0.3% for 2023, with risks skewed to the downside. We also believe that the delinquency rate is likely to reach an inflection point as more loans are transferred to special servicing, particularly as loans mature and must refinance at significantly higher rates and tighter lending standards.

Our outlook isn’t all doom and gloom, though. Extremely tight fundamentals continue to buoy the multifamily and industrial sectors; even with a potential recession looming over retail, vacancies are down and supply remains limited; while the office sector is on shakier ground than other commercial property types because of a prolonged return to office and corporate cost-cutting reducing office space demand.