Commercial Mortgages Jump in 2011
Making an astounding comeback, commercial loans rose 55 percent last year to $184.3 billion, reports a recent survey by the Mortgage Bankers Association.
This makes the third straight year of loan increases, with 2011’s numbers more than 124 percent higher than 2009. Although the pace is still well off the market peak in 2007 of $508 billion, it’s still a clear sign that liquidity is returning.
The majority of the loans are being financed by agencies such as Fannie Mae and Freddie Mac and the Department of Housing and Urban Development. Roughly 31 percent of all loans came from these sources. The remaining loans were financed by life insurance companies, 26.8 percent, banks and thrifts financed 17.5 percent and the remaining loans were funded primarily by CMBS lenders or REITs.
The MBA study is compiled by surveying members. For both 2010 and 2011, 83 members responded to the MBA survey and indicated they saw a 40 percent increase in origination volumes.
Q10 Capital was one of the 83 firms who responded to the MBA survey with better than average results. We are pleased to report that our full year results were $2.713 billion with 513 loans an improvement of 58% over 2010’s dollar volume. We did $810 million in retail, $678 million in multifamily, $546 million in industrial, and $326 million in office. The remaining balance included healthcare, hotel, manufactured housing parks, self storage and mixed use properties.
Federal Reserve Believes Strong Growth On the Way
In a survey released April 11, the Federal Reserve has said that last month’s temporary slowdown in hiring and business activity may be an anomaly.
The survey of business conditions in each of the Fed’s 12 bank districts showed that each experienced steady growth from mid-February to April 2.
Job gains were noted in manufacturing, shipping, information technology and professional business services, the study showed. Gas prices are a worry for many businesses, especially retailers. But for now, consumers are still spending.
Banks indicated that demand for loans in increasing, and residential real estate activity was improved in most regions.
In an effort to continue bolstering the economy, the Fed members are expected to hold short-term interest rates at record lows until at least late 2014.
Commercial Real Estate in Recovery Phase
The National Real Estate Investor, an industry publication, is bullish on the commercial real estate market.
“Real estate investment performance continues to display favorable conditions, a result of historically low borrowing rates and a modest inflationary outlook,” said David Lynn, a columnist for the National Real Estate Investor. “Very limited supply and rising demand is buoying real estate fundamentals for most property types.”
“Investor interest to date has been focused on top-tier assets in prime markets and is thus reflected in bifurcated cap rates, with rate compression in those select markets and assets. At this early phase of the real estate recovery, we believe the real estate asset class can provide very attractive return opportunities relative to other alternatives.”
Lynn said he sees improvements in multi-family, office, industrial, retail and hotel sectors of commercial real estate, citing indicators that all five are showing positive trends in rent growth aats to growth still remain – namely high fuel prices and nd vacancy rates.
While some threunemployment rates – Lynn said the trends point in the right direction.
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