As published in Scotsman Guide's Commercial Edition, June 2012.
Lending in the commercial real estate arena has been tight since the recession, but several recent studies indicate that things may be improving. According to results of a Federal Reserve study released this past April, banks are seeing increased demand for business and commercial real estate loans. And with increased competition for these loans, many banks also are easing their terms.
In addition, Gallup recently conducted a survey of small-business owners for Wells Fargo and found that only 30 percent of small-business owners had difficulty getting credit in the previous 12 months, a decline from 33 percent this past January. The number of small-business owners who anticipate problems getting credit in the coming 12 months also declined, from 38 percent to 32 percent.
What does this mean for commercial mortgage brokers? If these results hold true, increased interest in commercial lending may bring more business. And with the multifamily market heating up, brokers may want to focus their attention on these properties. This past first quarter, sales of multifamily properties increased 33 percent over first-quarter 2011, according to CoStar Group. In fact, sales of multifamily assets totaled $64.6 billion in 2011, a significant increase from $42.5 billion in 2010.
Brokers working with multifamily deals should be aware of how the Fair Housing Act can affect these properties, however. On Page 21, First Housing Development Corp.’s Tom Bernaciak describes how even minor deviations from the guidelines set forth in the act can derail a multifamily development. Make sure you’re up to speed on what the act — and the U.S. Department of Housing and Urban Development — requires from these properties to secure federal financing.
Another property segment that is experiencing growth and strong fundamentals is the self-storage market. Liberty Funding’s Anita Huedepohl describes the opportunities available in this niche on Page 24.
And even if the commercial real estate market is beginning to trend upward, there is still a large volume of distressed properties to work through the system before any significant recovery is possible. Working with bargain hunters in this arena can boost your business, according to Fred Massa of Industrial Concepts Brokerage LLC (Page 28). And MountainSeed Appraisal Management’s Carl Streck shines a light on the appraisal process for these properties on Page 34.
As the economy continues to inch back from the recession, keeping abreast of the latest trends in commercial real estate and keeping your business flexible to move with those trends is critical.