Credit is back, but buyers are still catching up

JLL's July liquidity readings put lenders well ahead of buyers, with the credit intensity index breaking its January 2021 record while the bid intensity index climbed to a one-year high. That gap is the number to watch through the rest of the year.

JLL's Global Bid Intensity Index tracks bidder activity on investment sales and the distance between winning bids and asking prices, while the Global Credit Intensity Index counts lenders quoting on loans and the average winning loan-to-value ratio. In July the pair found the second-highest number of unique bidders in five years and the strongest investment-sales competitiveness in more than a year, which JLL reads as an early indicator for the broader market.

Richard Bloxam, JLL's CEO of capital markets, distilled the moment: 'Liquidity is back — and building.' Exceptional credit strength over the past year, he said, is directly propelling transaction activity, and lender confidence has spread into the equity side with buyers stepping up with clear intent on larger deals.

The lag is visible in the index math, where credit intensity sits well above its prior January 2021 record even though average winning loan-to-value ratios have leveled off since April—lenders are quoting on more loans without extending meaningfully more leverage. The bid intensity index, by contrast, is at a one-year high rather than a record, and although the spread between the two has cooled from its May peak, buyers remain the slower side of the transaction.

That combination of a record credit reading and a merely strong bid reading departs from the usual overheating pattern. In prior cycles bidding intensity often ran ahead of credit as buyers chased a shrinking pool of debt; this cycle has the opposite shape, with lenders the aggressive side and buyers yet to match them. That suggests the market is normalizing from the credit side, which should support volumes, but it also leaves the next move to buyers.

Lauro Ferroni, JLL's head of capital markets research for the Americas, told Bisnow that a combined reading above 100 indicates a market more active and competitive than normal, and that winning bids are more likely to surpass asking prices as more buyers compete. 'If the indices are increasing, it signifies bidding and credit intensity is building — with momentum in transaction volumes likely to climb in the months ahead,' he said.

Ferroni also noted an internal wrinkle: the credit intensity index includes quotes for data center financing, though they do not represent a disproportionate share of the movement. The caveat matters as data center debt becomes its own asset class, a development this publication has argued is reshaping institutional real estate allocations, and the appearance of infrastructure-like lending inside a broad CRE credit gauge says something about where the marginal lender is willing to deploy.

Price, more than capital supply, is the obstacle ahead. JLL said the recent rise in bond yields is widening the gap between what buyers are willing to pay and what sellers seek, a classic bid-ask spread now sitting on top of a market where lenders have already pushed leverage to a plateau. For the second half, JLL anticipates a more normalized transaction environment—fewer stretched prints and more trades that clear at the new yield level.

Multifamily is the sector to watch, since JLL expects investors to focus on whether strong capital availability can offset continued borrowing cost pressure, particularly in apartments. The sector carried the early part of the cycle and now faces the sharpest repricing in underwriting, so the gap between lender aggression and buyer conviction should show up there first.

LTVs have leveled off since April, which suggests lenders have reached their leverage ceiling for now, and if bond yields keep pushing required yields up, buyers will have to bid through the spread to put capital to work. The second half will show whether they are willing to pay the new price—and multifamily, where underwriting is repricing fastest, is where the answer should surface first.