Commercial Real Estate News Wrap Up From Liberty SBF: July 13, 2016

July 13, 2016

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In its midyear update, the Mortgage Bankers Association stated that it expects commercial and multifamily mortgage originations to again reach the half-trillion mark. Although still positive, this is a more conservative estimate than previously made in February, when the expectation was $511 billion. Jamie Woodwell, VP of CRE research for the Mortgage Bankers Association, stated that “economic uncertainty” was the reason for this falling benchmark. However, he still believes that both upcoming maturities and sales transactions will be strong drivers for demand and should continue supporting commercial mortgage originations.

Smaller banks may face issues with CRE lending in upcoming months due to further regulatory scrutiny, which could lead to rising prices in secondary and tertiary markets. Richard Hill of Morgan Stanley writes for Bloomberg, “Given [regulators’] increasing concern about banks with high CRE exposures and years of loosening underwriting standards, we see a scenario where the most exposed banks will be unable to satisfy the CRE market’s financing needs.” Hill worries that small banks will feel the most of this burden due to their price-based competition with bigger institutions, who have more diversified assets and businesses.

Although the immediate volatility in response to the Brexit has mostly passed, investors still see safe investing opportunity in CRE. Ken McCarthy, principal economist for Cushman& Wakefield tells Commercial Property Executive, “The current uncertainty will likely lead investors to look to a more stable and more certain environment, and that would be the United States.” McCarthy believes that gateway cities such as New York, Washington, Boston, and San Francisco serve as the best opportunities for investors, despite their rising property prices, due to the safety of their real estate markets.

8+1 (That’s 9) Things You Need To Know

  1. Connecticut small businesses are expanding despite previous setbacks
  2. Lowered oil prices create opportunities for middle market properties
  3. REITS are poised to beat the S&P 500 index in 2016
  4. Mall owners are pushing out department stores for better opportunities
  5. Cushman & Wakefield is using virtual reality to sell real estate
  6. How the Hamptons became a pop-up breeding ground
  7. The impact of Pokémon Go on CRE
  8. As growth in apartment rents slows, U.S. developers press pause
  9. Shared office providers are opening up in secondary markets