• Michael Ryan

Commercial Lending Insights: November Market Update & Financing Solutions

I hope you’re enjoying the beginning of the Holiday Season! With the government open, until the next time political nonsense shuts it down, the noise will continue. For most of the market it is and has been a non-issue. Loans paid, groceries bought, gas put in the car, etc. Yet, staying informed is crucial in today’s evolving economic landscape, so let’s dive into the latest market updates and explore some exciting financing opportunities.

Successful Closings Are Our Priority

Interesting Loan Product Spotlight:

SBA loan programs for small manufactures enter a year of reduced SBA loan guarantee fees.

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Economic & Market Realities

1. 1. 1. The Economy: There will be an overabundance of focus on the past due repostings of all things government. Unemployment claims, GDP, inflation, etc. The most interesting part will be how the interest rate market moves. And, no way to predict it.
      2. Federal Reserve: Heading into the December meeting we have to remember Fed policy is about risk management, as the Fed sees it. I talk a fair amount on where the policy is not helping, or is as the case may be. For now the stated goal is we are trending 1 % higher than where policy states is equilibrium. Giving tailwinds towards a rate cut. Add to this the softening jobs market. The headwinds continue to revolve around inflation and the risk posed by rate cuts increasing inflation. Which wind is stronger, we wait a couple of weeks for the answer.
      3. Manufacturing: NY Manufacturers index, Demand is stabilizing, supply chains are still messy, pricing pressure is sticky, and the future is hazy. On the deflationary side, industrial capacity continues to show no signs of improvement. Excess capacity can lead to price reductions as businesses try to increase utilization. However, business investment and construction are both on the rise.

1. 1. 4. Inflation: The overall market, and the interest rate market will continue to take the lead from the headlines. Inflation expected to continue in the 3 % range. Not talking about what has gone up, down or sideways.. It is what are the resultant Treasuries going to do? Our lives operate in the micro, but our investing needs to be in alignment with the macro. Lending is up in 2025 vs 2024. Alternative sources up some, Banks and CMBS strong moves higher, with Life Companies taking a serious break from the action dropping from 43 % of the market to just 16 %.

1. 1. 5. Interest Rates: Commercial interest rates have eased, mirroring the trend in the 10-year Treasury and other notes. Apartment and some SBA projects are seeing rates starting with a 5, with some SBA 504 loans even achieving rates with a 4% handle.
      6. AI: I am beginning to hear more noise about AI bubble. My 2 cents worth is this is just noise looking to be heard. Can we have a bubble, the answer to ‘can’ is always.. yes, we can. Are we. Can we compare with dot-com ? I say no at this point. I am not seeing companies funding on a one page prospectus for funding. I am seeing the magnificent 7 invest billions of cash. Cash, not funding.. Cash. A bubble would be the Mag7 seeking bank and investor financing to continue the spending. Until then not running on loans. A different scene altogether. And, I am reminded of another fact: We’ve been introducing world-changing technologies for centuries. Every wave of innovation created more work, not less. AI is early stage, a lot yet to occur. Take heed, be aware yet don’t fear.
      7. Tidbits: Amazon seeking 21 B bond sales to bolster massive investment initiative. Bubble canary? On the other side Cass-Freight index dropped in October, unusual. Demand canary?

Spotlight: Key Market Sectors

1.Commercial Real Estate: YTD commercial transaction volume is up and 56 % of it is to private players. Institutional is slower to come back in, but beginning to. Sales volume increases were all negotiated pre Fed rate cut, indicating a warming trend overall in the market. 37 % market share to apartment transactions, highest level since 2022. Office at 16 % market share (29 % was pre Co-Vid levels). In light of recent large group transfers, the market continues to be led by single asset volume.

With the Apartment sector rental prices continue to ease. As one might expect from the great shot of supply that has come to market the past 12 months. Some will point to the economy as the cause, however I believe it all tracks supply vs demand.

2. Jobs Data: Conflicting data sources present a challenge. ADP indicates overall job losses, but this is based on a smaller dataset. We have seen the 3 month running average of job growth slowing from 200 K per month a year ago, to virtually zip today.

3. Retail sales: Excluding autos and gas were up 0.6% MOM and 5% YOY in October. In spite of alcohol and beer sales being down. Again, we need to follow macro trends and strive to not get lost in the headline noise.

NOTE: We successfully structure loans for apartments, hospitality, storage, office, industrial, agricultural, and development projects. Let’s discuss your project today!

Key: We have strong, ongoing relationships with a wide range of lending facilities, ensuring we can find the best fit for your needs.

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!