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Commercial Lending to Stay Tough

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I spent the day yesterday at the Commercial Broker's Association (CBA) Commercial Real Estate Form.  A great program on relevant issues in today's commercial real estate markets. The one presentation that hit hard was Market Knowledge: Strengths and Weaknesses in Different Segments of the Commercial Real Estate Market presented by Dr. Jim DeLisle, University of Washington Director, Graduate Real Estate Studies at the Runstad Professor of Real Estate. 

My take away: The Commercial Mortgage Backed Securities market, where commercial mortgages were bundled and sold, has pretty much evaporated. The only loans that are being made and will continue to be made are portfolio loans, where the lender actually keeps the loan in their portfolio. The result... very few mortgages are being written. It is much more difficult to obtain a commercial mortgage and the loan to value; the present value, is in the neighborhood of 40% - 60%.  With many commercial mortgages rolling over in the near future, new financing will be a problem. I expect there will be many good opportunities to purchase commercial properties at attractive rates.

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1 response to “Commercial Lending to Stay Tough”

  1. Libby Says:
    Well done aritcle that. I'll make sure to use it wisely.