What’s happening in the commercial real estate space this year?
2017 is shaping up to be an active and interesting year for commercial real estate. What can we expect?
New Commercial Real Estate Lending Records
The Mortgage Bankers Association forecasts that commercial mortgage lending will hit a new record of $515B in 2017, and may set another record high in 2018. New funds, and almost $2T in international capital could also substantially boost the amount of debt financing made available and put to work in the US market this year.
Commercial Mortgage Interest Rates
One of the biggest pivots this year is the change in direction of mortgage interest rates. While interest rates are still hovering near historical lows, new fed rate hikes will almost certainly gradually drive up mortgage lending rates too. This will give a substantial advantage to commercial real estate investors who act sooner, and lock in longer term financing.
Expanded Commercial Loan Programs
President Trump may so far have been rather unsuccessful in implementing his plans. That includes immigration, healthcare, tax reform, and so far, repealing Dodd-Frank as well. However, on one hand this has also been good for commercial real estate investors who are benefiting from lenders’ preference for loaning to investors over regular home buyers. This has already led to the expansion of loan products in 2017. We have stated income loans, no ratio loans, and credit score requirements appear to be dropping as well.
The World Property Journal reports that global investors are still hot on the office sector. Retail may have its challenges this year as some US retailers appear to be continuing to reduce their footprint, even those Amazon is expanding its own. This hints at the surge in another new trend of logistical real estate. More properties are doubling as hybrid internet store fronts, as well as warehouses for rapid shipping of product locally.
Private-public partnerships seem to be growing. Some are centered around parks and community spaces, others are taking on revitalization and are driving the establishment of greener, healthy, and more sustainable neighborhoods and districts.