Commercial Lending Insights: February Market Update & Financing Solutions
A New Month, and New Headlines.
Successful Closings Are Our Priority
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New to me? Great to meet you. We can build out something great by talking.
With just a few things out of the way, we can start our roadmap, which can include these services:
Tax-Deferred Exchanges 1031’s
Existing Loan Opportunities
Creative Solution for Complex Properties
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Our recent work continues to encompass the Home Health sector, Apartments, Modular Construction with a bit of Industrial to keep the conversations going. What are you working on?
Economic & Market Realities
The Economy: The latest CPI numbers cooler than expected. Dropping to 2.4 % and the Core to 2.5 %.
We / I am beginning to feel a disconnect with the Jobs numbers reported. How do we go from 180 K jobs created in all of 2025 (expectations for further reduction as the QCEW reports come out) to a January only month of + 130,000?? After the initial market reaction (all of 1/2 of a day) the markets finished last week moving as if this number were completely bogus. I await a change in methodology. This weeks ADP weekly reported 40,000 jobs added in January.
Retail sales for December were flat year over year. Core down .1 % and November revised down as well. Not negative, flat. With all the growth in sales the past couple of years I believe this is holding up very well.
On the flip side is the concern regarding 90 day late payments increasing. 30 days behind is not too hard to make up, but 90 days is really a technical point of real challenge.
Boding well for the economy was an upwards revision to the manufacturing data. Touching 3.7% for overall and durable goods up 5.4 %. Labor productivity and output is up strongly across all sectors year over year.
2. Federal Reserve: With the January jobs number writing a blowout number, expect the lame duck Fed to do nothing at the next meeting. What we have is what we will get for the near term. Yes, we can all hope for better, yet a solid stance will work. As we know how to work it.
3. Employment: Food for thought: Perspective: As the posted numbers for weekly unemployment claims continue to be pretty much the same, the unfortunate methodology utilized to meet the markets’ “I have to have the number immediately” to trade upon has moved us to an impractical position. The methodology does not do a good job of giving us current truth. How many people facing a layoff go to file for a couple hundred dollars a week? How many jump into the gig economy (which is not a cash economy) and go part-time. This results in inaccurate unemployment numbers. The only numbers with substance are the QCEW reports, and they run close to 6 months in arrears.
Along with this: Unit labor costs easing slightly due to a nice jump in productivity in Q3 25.
Our writings are here to point out these substantial points for you to take into account as you go forward with your business.
4. Inflation: Another easing number. Another market moving number with questionable inputs. The often talked about housing component. We have talked of it for a couple of years, the newsies for the past couple of quarters. I am happy to report our clientele is taking their perspective of inflation to heart and moving forward with the basic zero inflation into their calculations.
5. Interest Rates: Here is where the market speaks its truth. I follow the 10 year Treasury for the market bellwether. Having moved up earlier, we are seeing some easing. I have stated for a while my feel is 3.75 to 4.25 % is the band we will be in. And we are still running in the top half. I call this great news as a drop below or sustained rise above will be speaking to changes in the market of money.
6. Commercial in General: Opportunity is here. I am happy to report continued forward momentum using realistic numbers. Very interested in what you are seeing, hearing and looking at. There is 3 slightly different investment philosophies I am seeing and working in. Some are in the value add, opportunistic space. Others are in the solid, almost mailbox money space. And, then those seeking the bottom of markets, holding for the momentum swings upwards. If I don’t already know, kick me an email and let me know your style, and if you are in play. We will talk.
Spotlight: Key Market Sectors
Apartment Real Estate: The market news is continuing to lean into an expected lack of supply coming online. I have noticed a slight drop in CAP rates for many properties. Good time to hold. A better time to acquire value add. If you agree and believe the momentum is towards lower CAP rates, this may be a buy signal for you.
Interest rates often are touching into the 5’s, with large projects going even lower in rate. Rents holding steady, renewals still moving up slightly. Very stable dynamics overall.
Multi-family new rents is down year over year. Renewal rents up 3.3 % year over year. Providing a bit of ‘dis-inflation’ going forward into the year. Renewal rents nationwide is still running about 3 % a year in line with inflation numbers. Also a deflationary number.
2. Residential Sector: Similar to the movement on the 10 year Treasury, mortgage rates are once again trying to edge lower.
The single-family resale market continues to be hot. I make this statement as my clients continue to write offers, and are often times beat out. These are well marketed, well priced properties. Those often times go into contract within days of being available. Yes, many properties appear to languish time-wise on the market. No easy answer here, just what my clients are experiencing.
New rents are up 1.1 % year over year, the slowest in the past 15 years.
Some Of Our Services: How We Can Help
Tax-Deferred Exchanges (1031s) Are Booming: Considering a 1031 Exchange? Contact us before you sell! We’ll help you maximize tax benefits, keep your capital working efficiently, and reinvest strategically.
Loans Coming Due? Act Now! Loan extensions are not guaranteed or as easy as they once were. If you have an upcoming maturity, don’t delay – start the financing process early.
Creative Solutions for Complex Properties: We excel at structuring financing for unique properties and deals that don’t fit traditional lending criteria. If other lenders have turned you down, we may be able to help. Interest only? No tax returns? All available, yet what is the most opportune for you?
We successfully structure loans for a wide range of properties, including apartments, hospitality, storage, office, industrial, and agricultural projects.
Let’s Connect
We’re in the business of building strong relationships, and our lending partners trust our process. This translates to better execution and smoother closings for you.
With expectations of falling interest rates and significant new investments coming to the USA, now is the perfect time to prepare for future growth.
Let’s talk today to position you for success in the evolving market. Call us to discuss your specific needs and goals!
Be well.
