Good morning to Summertime;
Commercial Lending
The Business and Investor Side of Our Business
1) Interest rates: Watching the Federal Reserve and CPI, both provides insight into the future of interest rate. This past week provided some good news regarding inflation. Numbers are positive in regards to the Fed’s 2 % target, as unemployment numbers continue to be muted. The interesting part: If ALL of the positive inflationary numbers in the CPI report, rested solely upon auto insurance and housing, and then you took them out, CPI becomes Zero.
As for the 10-Year, it is in the range of 4.25 to 4.75 %. Good news: After bouncing off of 4.75%, we are trending at about 4.4 %.
2) Residential Real Estate: New home construction is doing well, however some slowdown in future permits, is occurring. High interest rates, labor, etc. coupled with extended development times, are keeping builders cautious – at best. No relief from low inventory in the mid-price range is on the horizon.
3) Commercial Real Estate: Top line numbers: 2023, in spite of all the predictions about pending recession grew better than 2022. For GDP. Not all quite as rosy in the Commercial Lending and Sales arena. Loan originations were about 50 % of 2022, due mostly to the higher interest rates. Sales volume declined by a similar amount. 2024 started well with the short period of interest rates dropping, yet with rates back up, the market has slowed.
4) Retail: Pre-Covid, vacancy rates at U.S. shopping centers was 6.25%. The rate peaked in 12/20 at over 7%. Since, it has been declining and is now 5.3%. This is the lowest level in probably decades. As a result, new mall construction activity largely stopped. Good news: Consumers are again shopping in person. Rents are now 17% above 2019 levels. As for “Bust” vacancy rates, they peaked in early 2010 at over 10%.
Perspective: Retailers closed 5,000 net stores in 2019, 6,000 net stores during pandemic-plagued 2020, and several hundred in 2021. Since then the improvement has been amazing. In 2022, 1,500 net stores opened, in 2023 almost 500 opened, and YTD, 750 have opened. Combine that with almost no new retail construction – allowing oversupply to dissipate – is booming. Suburban demand and the vacancy rate is below 4.8% – a record low.
Good News: Commercial investing, as a whole, is quite diversified. This makes it possible to match and meet most investor’s financial goals and interest. Our goal: Best matching our investor clients, with the best lending options and customized programs. Let’s talk, today. Early preparation is key.
Call us. We are ready to help today.
I hope you find these insights and economic news, most helpful for Commercial Investing
as well for our Residential work! Key to Both – Discipline, Preparation, and Patience.
Banking and Financing: DIY or using a Broker.
DIY: Benefit: You can trade on your historical connection with your Bank. Downside: You are not always sure they are actually getting it done. The Bank loan agent brings the deal in the door, but they are not allowed to tell you the percentage of actual closings.
Broker: Yes, you do pay a point – Except with SBA and residential lending. Benefits: Our connections to lending sources, interaction with industry groups, and continued conversations with our peers. This brings about true and open competition able to quickly adapt to the shifting landscape and your unique situation. Do you benefit from hiring Mike Ryan? Time proves to be Yes. And with future challenges ahead, all the more reason to call. As a Broker, your victory is my win.
Good News:
Our commercial successes continues. The depth of our lending partners allows us to work with certainty of execution. We are getting it done, because we the proven credibility !
An area we are receiving the most calls: Out-of-state properties. For us, the loan amounts seem quite small – sub 1 Million. – plus they have their own bucket of challenges. The difficulty: Smaller loan amounts – within smaller populated areas – often causes main stream banks and lending platforms to leave them alone. Regardless. We dig deep, seeking solutions for the unique projects of our clients. Who do you know scratching their head, regards a small, out-of-area project? Call us ! Now is the time to begin the process.
Consider as well, the breadth of our lending, from `1) business-purpose loans – with light documentation – to 2) re-development building projects for housing plus 3) commercial property purchases. How does this work? It works because of who we are. We offer a broad range of lending partners able to provide flexible loans, excellent programs, and great terms. It is how we help move your life forward and our track record shows it. It is what keep our phone ringing. Let’s talk. We can help.
Consider Loans Coming Due: They are in high demand, as evidenced by our increased work to refinance various commercial properties. Recent statistics show 30 % of maturing loans were refinanced, 25 % were modified and 40 % are in default. In todays market of risk and uncertainties, it’s key to check loan parameters and due dates. For certain, don’t miss the annual lender requested financial statement. Key: Stay ahead of coming due dates to keep your lender smiling. Good organization is most worthy.
Yet, if you have troubles, please note: We can help with loan modifications
Good News: We have great lending partners. They respect our work and attention to detail. This is good news for you, as they trust our approach and loan packages. In response, we carefully strive to maintain the quality of their depository relationships. This is called team chemistry and is what makes our lending relationship, a winner. Join our team.
You have heard me say: It starts with a first conversation. Let’s talk today.
Enjoy your family and friends this Spring season. With all the financial talk, key is who we have around us and with us. Be well and be safe, knowing we are here for you.
