Baby Boomers, Retailers Could Change Commercial Lending
Some of the industry’s top commercial real estate mortgage bankers expect business to stay just as strong in the national and Philadelphia commercial real estate markets in 2019 as it was in the past two years even as the economy shows signs of slowing.
The Mortgage Bankers Association predicts loan origination in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – will only reach $530 billion in 2019, essentially on par with 2017 and 2018.
This report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
The amount of financing in the fourth quarter of 2018 beat the year-earlier period by 14 percent, the group said. It suggests that commercial and apartment lenders apparently have not been scared off by government shutdowns, stock market volatility, looming global trade wars and other headline events. And this follows almost a decade of recovery involving U.S. and Philadelphia commercial real estate listings tipped from one of the nation’s worst real estate collapses, as analysts and economists wonder how long this recuperation can last.
Indications for the immediate future of both national and Philadelphia commercial real estate properties are for steady lending activity, bankers agree.
For 2018, “the market as a whole ended the year roughly flat compared to 2017, continuing a plateau we’ve seen in mortgage borrowing and lending since 2015,” said Jamie Woodwell, vice president of commercial research for the mortgage bankers’ group.
These were among the key points from the Washington, D.C.-based trade group, which represents lenders, investors, developers, and others involved in commercial real estate financing.
– Financiers avoid retail: Blame the rise of ecommerce and retail chain store closings, but MBA figures show loans in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – posting relatively anemic growth in the past year. They were up 1 percent in the fourth quarter from a year earlier in 2017, compared with 32 percent growth for apartment loans and 28 percent growth for industrial loans.
– Aging boomers haven’t yet spurred a healthcare lending boom: US. growth for healthcare and senior-housing-related lending was up 61 percent year-over-year for the fourth quarter, but analysts said aging baby boomers still comprise only a fraction of development and lending activity.
– As banks get queasy, others stand by: Even if banks dealing with national and Philadelphia commercial real estate listings are getting skittish about how long the good times can last, a multitude of other financiers stand ready to step in, and the fastest growing contingent includes debt funds. Numerous prominent firms in financial management and private equity have established funds geared primarily to lending to third-party commercial investors and developers, and they are finding rewards even in a tight interest rate environment.
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