A look back at 2013 for commercial real estate lenders

The holiday party season in Illinois and around the country has arrived, and that means many people are attending parties and looking back at 2013. Commercial real estate lenders are no exception, and as it turns out, there is a lot to celebrate. Preliminary numbers for the third quarter of this year show a substantial increase in lending when compared to the third quarter of 2012.

Even with apartment loans on the decline, the surge in retail, industrial and office spaces was more than enough to offset that downturn. To this point, there has been more commercial lending done across the United States than in all of 2012. Several markets have shown increases upwards of 29 percent from last year.

A side effect of this increase in lending activity is that there has been a reduction in the spreads charged by lenders. Construction loan pricing has fallen nearly 75 basis points and loan-to-value ratios have gone up to an impressive 70 percent. Interest only periods are being offered on some loans for up to five years.

It would seem the commercial real estate business is rebounding after a long and difficult period. Lenders are once again beginning to relax their lending standards. Illinois business owners looking to get into the commercial real estate market may be able to obtain more affordable financing than has been available in recent years. Since commercial construction projects can sometimes stimulate local economies, a look toward 2014 could finally reveal the silver lining around the dark cloud that hung over the commercial real estate market during the recession.

Source: Commercial Observer, Commercial Real Estate Lenders Reaching, Exceeding, 2013 Expectations, Michael Stoler, Dec. 2, 2013

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