A new organization, the Commercial Loan Brokers Association (CLBA) was formed this year and is focused on improving the knowledge and skills of the nation’s commercial brokers. Terry Luker, the co-founder of the association, says one of the aims of the group is to educate the broker ranks about the deal process. Luker spoke with Scotsman Guide about CLBA’s upcoming conference being held Oct. 1–3 in Orlando, Florida. For details, visit clbassociation.com. He also discussed the state of commercial real estate, the chance of interest rate cuts and the continued commercial strength of the Sun Belt.
Tell us about your concept for the CLBA conference.
The CLBA was launched earlier this year to fill a void in the industry and develop a conference for lenders, vendors and brokers to gather and make meaningful connections. There will be great speakers and breakout sessions. This also is an opportunity for us to move the conference toward education and to emphasize certification. That was really the attraction for us to form the CLBA. We want to educate brokers and help them learn how to successfully convert that lead from the borrower to a funded transaction. We are really excited about the folks that have signed up to attend.
What is your education initiative?
That’s the purpose of our association. We want to center it around education and then build it toward a certification program. The program is called the Commercial Loan Broker Academy. We are working with a company right now and have picked out a good course curriculum. At the end of the program, the participants would be certified commercial loan brokers. We will focus on what is a commercial loan broker. What are the types of deals that are out there in the commercial lending world? And also, who are some really good lenders that brokers need to meet? So, the program will be from A to Z on how to be a commercial loan broker.
In light of the ongoing downturn, how are the ranks of the loan brokers faring right now?
Anytime there is a downturn, you are going to lose some people in your industry. When there is a downturn in lending and banking like we are seeing right now, there are still some banks that are lending, but there are many that are not. They may say they are lending, but when you get down to doing a deal, they won’t close. Now, more than ever, a borrower really needs an advocate, and that’s what a commercial loan broker is. They are advocates for borrowers when facing a lender. This is a crucial time for borrowers seeking a loan. We have seen some brokers leave the field. But the really gifted and talented ones are going to be successful in a downturn because borrowers really need a broker’s help finding the funding they need.
How do you see the commercial real estate market right now?
Everybody thought that interest rates were going to come down this year because typically they do come down in a presidential election year. I was talking with a bank CEO the other day and he told me that all the economic indicators show that the Federal Reserve should be raising rates higher. But because it’s a presidential election year, the Fed is holding steady and won’t do that. My concern is that once the election is over, the Fed may raise rates. If we keep trending toward a better prognosis, then the Fed may be able to hold interest rates steady, but I don’t think we are going to see any rate reductions until maybe the first or even second quarter of next year. But I’ll be honest with you. I won’t be surprised if we don’t see rate cuts until the third or fourth quarter of next year.
What trends are you seeing in commercial real estate?
Multifamily is still hot. I mean, everybody needs a place to live. Your one-to-four-unit complexes are doing great. Any office product is cold. Everybody is still scared to death of office buildings. But multifamily is very strong. There are a lot of good things happening in our industry right now. I can’t stress this enough: When times are tough is when really good commercial loan brokers are going to be successful.
Is the Sun Belt still doing as well as it was a few years ago?
It really is. There is a lot of construction activity right now. It’s almost like everybody’s just gotten used to the rates being higher and now they’ve penciled that into their budgets. I mean they may not be building $50 million hotels, but they are building $20 million hotels. People are just getting on with their lives. They realize that we are going to have this high-rate environment for a while. So, they are just going to have to pencil it out and make it work. The Southeast is still on fire. There are a lot of opportunities in this area.
