U.S. banks are continuing to meet the rising demand for commercial real estate lending in key markets, according to a new report from the CoStar Group. Total commercial real estate loans issued by all FDIC-insured commercial banks and savings institutions reached $1.75 trillion in June 2015, a 7.1% increase from a year ago. In comparison, commercial real estate lending stood at $1.63 million in June 2007 at the peak of the commercial real estate markets.
The biggest hike came in construction and development loans which soared to $256 billion, up $33 billion or 15% form a year ago. Multifamily loan balances rose 11.8% over the past 12 months, reaching $315 billion by the end of second quarter 2015, according to the FDIC. The biggest segment of commercial real estate loans came in other non-farm non-residential property loans, which totaled $688 billion end the end of the second quarter, up 6% year over year.
One area that did not follow the trend was in the segment for loans totaling $1 million or less for small businesses backed by nonfarm, nonresidential properties. Small business lending in this area was down 1.6% in the past year, or 30,284 fewer loans.
While banks continued to back more commercial real estate loans, the asset quality of the commercial real estate loans continued to improve. Net commercial real estate loan losses dropped over the past year for the 20th consecutive quarter. In the first half of the year, banks charged off only $1.2 billion in commercial real estate loans, a decline of 31% year over year.
Delinquent commercial real estate loan balances at U.S. banks declined for the 21st consecutive quarter at the end of the second quarter, reaching $22.35 billion, a drop of 30% in the past 12 months. Banks held $10.4 billion in foreclosed commercial real estate properties at the end of June, a decline of 26% year over year. Half of that total dollar volume consisted of foreclosed construction and development properties.
Bank profits also continued to climb in the second quarter, with a reported aggregate net income of $43 billion, an increase of $2.9 billion or 7.3% from the second quarter 2014, the FDIC noted. It was the highest quarterly income ever recorded.
Overall, bankers reported higher profits, improved asset quality and increased lending in the second quarter, the FDIC reported. Nearly 60% said quarterly net income grew, while less than 6% saw a net loss. The number of banks categorized as problem banks fell in the second quarter 2015 from 253 to 228, the lowest number in seven year and a stark drop from the high of 888 in first quarter 2011. Only one bank failed in the quarter.
Despite this improved environment, the FDIC noted that low interest rates remain a challenge to the banking industry.
For more information about Philly office space, Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com), Leor Hemo (leor.hemo@wolfcre.com) or Lee Fein (215-799-6900-office; 215-206-5580-cell; lee.fein@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate broker with expertise in Philly office space.
Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space or new Philly retail space with the Philadelphia commercial properties that best meets their needs. As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space or Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.
Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.
