Cautious, Even Pessimistic Picture of CRE Lending Emerges at WoI Conference
Volatility has been the buzzword of the day, particularly in the past three to four weeks.
OLYMPIC VALLEY, CA—During an “unplugged” panel discussion at the GlobeSt. Women of Influence conference, industry experts shed light on the current state of lending in the commercial real estate market Tuesday afternoon and the sentiment among the panelists remained somewhat negative, with Sara Graham, SVP of Capital One, stating that transaction volume was down 70% year over year, making it a challenging environment.
However, Capital One remains active in the lending market and expressed confidence in multifamily and industrial fundamentals. Graham highlighted their focus on major markets across the top 25 MSAs and noted supply concerns in Phoenix, Austin, and Nashville, evaluating their potential impact on vacancy rates.
When it comes to lenders outside of banks and Capital One, the situation appears quite varied and “volatile.” Graham mentioned that the responses they received from other lenders were across the board, indicating significant fluctuations and uncertainty. Volatility emerged as the buzzword of the day, particularly over the past three to four weeks, panelists said, resulting in a real rollercoaster on the treasury side. “This market turbulence has made it tough for investors to underwrite transactions with confidence,” Graham said.
Graham acknowledged the fortunate position of the multifamily sector, benefiting from the support of Freddie Mac and Fannie Mae, providing a valuable backstop during these challenging times.
Amy Curry, Chief Strategy Officer of Dermody Properties, brought attention to the alarming decline in the number of banks that are actively lending in the CRE market. This drop-off was a clear signal of the tightening lending conditions in the industry.
And panelist Carmen Decker, regional president for the regional states at Kimco Realty, shared her experience dealing with assets that had been on the market for several months but repeatedly fell through due to lending issues. She predicted that in the next couple of quarters, companies with available funds (like Kimco for example) would have an opportunity to purchase distressed properties.
Overall, panelists’ insights painted a cautious picture of the current lending landscape in CRE.
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