Recent reports indicate that commercial real estate lending continues to be at all-time highs, signaling a strength in this market and greater potential opportunities for investors. If you are considering purchasing commercial real estate, it is important to understand how this new landscape may impact your investments. Some ways that the robust lending environment will likely affect commercial real estate transactions include:
Greater Access to Lending
Investors who may have been denied previously may qualify for lending under current lending policies. This may enable new investors to be qualified for loans and at more favorable rates. Ultimately, this can result in more investors competing in the same space.
Favorable Credit Spreads
The CBRE Lending Momentum Index also showed that there is favorable credit spread to investors. Financial experts predict that all-in financing rates are probably going to remain favorable, at least in the near-term. Additionally, lenders may be willing to provide more favorable rates to established customers with good track records. Additionally, since lending is more robust, lenders may offer more favorable rates in order to be competitive with other lenders.
More Alternative Lenders
Alternative lenders are growing in number as the healthy market remains in place. There may be continued transition from institutional to private direct lenders for commercial real estate acquisitions.
Due to the robust market, more investors will try to take advantage of these benefits by acquiring additional properties. According to the CBRE Americas Investor Intentions Survey 2018, 45% of investors stated that they plan to increase their level of acquisitions compared to their transactions from 2017. In all, 88% of investors plan to maintain their same amount of spending or increase it this year. This will create greater demand in the marketplace.
While some markets have realized enormous growth and returns, many investors are searching for the next area where significant increases are possible. Investors continue to look for markets where office use is expected. Where there is greater job growth, there is greater opportunity for commercial real estate investment.
Additionally, many investors are looking for industrial properties. According to the CBRE Americas Investor Intentions Survey 2018, 50% of investors consider industrial properties as the most attractive option for 2018. Investors are also actively seeking alternative commercial real estate acquisitions, including senior housing, student housing and healthcare.
If you want to take advantage of this investor’s market, it is important that you have an experienced commercial broker on your side. Arthur Nachman is that broker who can help identify your investment goals, connect you with lenders and help you navigate each step of the acquisition process.