Commercial Real Estate Lending Update

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It’s a mix of both moderately good news and some bad news.   Starting with the bad news is that we had a major drop off in construction and development funding from $321 billion last to $240 billion this year.

I was pretty optimistic back during the second and third week of January when I was seeing quite a bit of new triple net or absolute net, single tenant, corporate leased retail properties coming on the market.  I mistakenly gave the impression to many of my buyers that they had a huge inventory with which to choose from.  We all know what happens then: nothing gets chosen while waiting for something more perfect than the last one looked at.  Now that inventory is sold with little new coming on the market.   I didn’t expect this to happen as I thought we’d have a much better inventory this year.  I need to clarify that we have plenty on the market, but not of the NNN, triple net or absolute net, single tenant, corporate leased retail that seems to be everyone’s favorite product type.

Ok, now for the good news.  Mark Heschmeyer with CoStar news reported

“It’s not a big hook to hang a hat on, but the small increase in some commercial real estate loan balances on bank books at the end of the year serves as yet another indication of thawing lending markets for property investors.

Overall loan balances on bank books posted their largest real growth in four years, according to year-end numbers released this past week by the Federal Deposit Insurance Corp. (FDIC).”

There was a minor dip in CRE lending for multiunit residential, but other than that, we are slowly coming out of this.

Total loans outstanding for owner-occupied CRE and multifamily properties saw a modest increase year over year — from $452.6 billion to $457.2 billion for owner-occupied and from $212.7 billion to $218.5 billion for multifamily.

CoStar News – Article – Banks Returning to CRE Lending