Commercial real estate lending activity, prior to the onset of the pandemic, remained prosperous among life insurers, banks, the GSEs and other alternative providers, such as REITs and debt funds. Driven primarily by strong commercial real estate and economic fundamentals, this activity remained robust up until early-2020, when the COVID-19 pandemic hit.According to a CBRE index
, commercial real estate loan closings declined nearly 21% year-over-year in Q2 2020, as a result of the temporary, pandemic-related freeze in lending and transaction markets between mid-March and early-April.
At that time, the industry’s lending sources began to shift greatly, as additional lending groups entered the space.
In Q2 2020, banks captured more than 70% of loan originations in the previous quarter, according to CBRE
. In Q3, banks continued to lead non-agency lending groups by capturing 39% of loan closings.
In Q3 2020, life companies accounted for 22.5% of non-agency loan closings, and alternative lenders, including REITs, finance companies and debt funds, accounted for 34% of loan volume.
In addition to these changes, underwriting criteria became more conservative for lenders, resulting in fewer options for some borrowers, according to Marcus & Millichap
Furthermore, FHFA recently set new 2021 multifamily lending caps
for Fannie Mae and Freddie Mac, which could potentially pose challenges for large market-rate deals and could in turn benefit small balance markets.
Facing countless substantial challenges within the market, commercial real estate lenders have persisted by proceeding with caution and constantly adjusting strategies.
As lender, Vince Chillura of Valley Bank suggests
, “Assuming we don’t see major changes in any particular niches, the challenges are the same as always for us as lenders. Our success depends on making smart decisions, working with solid borrowers who have experience and knowledge in their industries.”
Now, after nearly a year of uncertainty, commercial real estate lending markets are once again gaining traction as deals begin to flow. Though the recovery is expected to be slow, the lending market continues to show signs of hope, as the number of loan applications continues to increase.
This movement within the industry is largely credited to the unrelenting efforts of the industry’s talented professionals. With this in mind, GlobeSt. Real Estate Forum
is seeking to shine a spotlight on the lenders of CRE capital.
For GlobeSt. Real Estate Forum’s
Lender Influencers in CRE Finance, we will profile not only individual pioneers whom have made an impact through their efforts, but also lender organizations and the teams within that have become critical to the industry.
Be it through their contributions to the industry, the vast successes they’ve racked up in completing deals, or the innovations and best practices they’ve introduced to the business, these are commercial real estate’s Lender Influencers in Finance. The deadline for nominations is March 5, 2021. To apply, click here.
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Women of Influence