• Michael Ryan

Commercial Lending Insights: October Market Update & Financing Solutions

I hope you’re enjoying the tail end of summer! 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:

Banker Loan Fallout Solution: Is your SBA 504 loan stuck in limbo due to a delayed Certificate of Occupancy (COE) or other easily resolvable issues? We offer a 90% financing bridge solution to get things moving again. Don’t let solvable delays hold you back!

Have another commercial loan to consider? Here’s a quick 10-question questionnaire to help us understand your needs and find the perfect financing solution. https://michaelryan.getprequalified.io/

Economic & Market Realities

1. 1. The Economy: Despite the government shutdown, the economy is performing remarkably well. We anticipate a strong 3rd Quarter GDP report. The effects of the $5 trillion stimulus injected during and after COVID are gradually diminishing, and household finances remain robust – perhaps even contributing to the “asset bubble” many are discussing.
   2. Manufacturing: 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.
   3. Inflation: Predicting inflation remains uncertain until the government reopens. We’re confident that tariffs aren’t driving an inflation surge, and our real run rates are closer to the high 1% range than the published high 2% figures.
   4. 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 in the 5% range, with some SBA 504 loans even achieving rates with a 4% handle.
   5. Tariffs: A quick look at tariffs shows that 80-90% of Canadian and Mexican imports qualify for exemptions. It’s also important to remember that the U.S. isn’t highly import-sensitive overall. While some industries are affected, imports don’t represent a massive portion of the country’s GDP.

Spotlight: Key Market Sectors

1. 1. Commercial Real Estate: The market continues to be a mixed bag. While news outlets report foreclosures in CBD areas, sales pace is up year-over-year, and cap rates are easing. These are encouraging signs of movement in a cautiously optimistic market.
   2. Jobs Data: Conflicting data sources present a challenge. ADP indicates overall job losses, but this is based on a smaller dataset. The larger BLS report is currently unavailable due to the shutdown, as is the weekly reporting on unemployment filings.

As an interesting alternative note, Gen Z currently has the highest inflation-adjusted average wages of any generation at the same age.

3. 3. Land Costs for New Home Construction: Major builders maintain that tariffs aren’t impacting costs, nor is ICE affecting the workforce. The housing construction sector is primarily driven by large, publicly traded companies. I suspect tariffs and ICE are affecting the rehab and flip sectors, as these often rely on undocumented workers and lack the buying power to offset tariff impacts. This sector is yet another tale of two cities. Demand is being driven by a 0.7% increase in the U.S. population, but with an 8% increase in household formation, fueled by increased feelings of wealth.

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. Use the QR code above to get started or reach out directly.

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.

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!