The commercial real estate lending market appears to be growing, reflecting recent economic gains in other areas of the economy as well. According to data released this week by the Mortgage Bankers Association, commercial and multifamily mortgage origination volumes increased by 55 percent in 2011. Mortgage bankers reported a total of $184.3 billion in closed commercial and multifamily loans.
Despite gains in commercial lending activity, the residential real estate market remains plagued by weak demand and high foreclosure activity. On Wednesday, analytics firm FICO reported nearly half of surveyed lenders expect strategic defaults this year to exceed their 2011 levels.
Furthermore, roughly 80 percent of loans in commercial real estate collateralized debt obligations currently have floating interest rates that have been held back by benchmarks in recent years, according to Deutsche Bank analysts.
Still, a number of analysts remain optimistic. Jamie Woodwell, vice president of commercial real estate research at the MBA, believes conditions will likely continue to improve this year.
"Commercial mortgage lending continues to rebound from its 2009 lows," Woodwell said in a statement. "Originations for life companies, Fannie Mae, Freddie Mac and FHA [Federal Housing Authority] were all strong, and banks, commercial mortgage-backed securities (CMBS) issuers and others also saw strong growth. With interest rates still low and stability returning to real estate fundamentals, the rebound is expected to continue in 2012."
Commercial borrowers – whether real estate investors, franchise owners or entrepreneurs – may want to consider expanding their network of potential lenders to achieve financing on the best possible terms. Such trends have led to the surge in popularity of lending marketplaces like BoeFly, which offer borrowers the ability to connect with a network of more than 2,200 potential lenders nationwide.