Stable Secondary Markets Remain Lender Focus
Money360 plans to focus on stable secondary and tertiary markets through the end of the year.
While there is increasing concern about the maturity of the economic cycle, many real estate professionals are forecasting stable fundamentals and economic performance at least through 2020. While these strong fundamentals hold, lenders are focusing on stable secondary and tertiary markets with future growth potential. These markets include areas like Las Vegas and Phoenix, which has seen increased population and borrower demand late in the cycle. Tech enabled private lender Money360 is focused on secondary markets through the end of the year.
“At Money360, we’ll continue to focus on the stable secondary and tertiary markets that have seen a boom in millennial migration and business expansion,” Gary Bechtel, president of Money360, tells GlobeSt.com. “I anticipate the demand for bridge lending to continue to trend up as well, particularly within the secondary markets.”
Bechtel expects the Money360 business to continue to grow—as it has for the last year. (In December the firm hit $1 billion in commercial real estate loans.) Overall, the industry in general should see strong loan volume, even as some expect slower economic growth. “As the commercial real estate industry anticipates entrance into a new phase of the cycle, I don’t see the current pace that we are seeing letting up any time soon,” says Bechtel. “We’ve done work in a number of regions comprised with a variety of asset classes and all markets.”
In particular, Bechtel expects strong demand for bridge loan product, especially in secondary and tertiary markets where there is more value-add and redevelopment activity. “The bridge debt vehicle has become more refined over time as we see borrowers leveraging these loans to make improvements, increasing property value, whereas in the past, they were used primarily for acquisitions,” says Bechtel.
Strong rent and value growth in these markets makes those deals very attractive for lenders. Bechtel expects that demand to thrive through the end of 2020. “Add in the rent and value growth that tier-two cities generate and we’ll continue to see an attractive option for both borrowers and investors alike, leading to continued demand in the second half of 2019 and into 2020,” he says.