The commercial real estate market was one of the worst affected when the pandemic hit in 2020, and the recovery has been slow. However, activity seems to be returning, with more investors actively looking to buy or sell their properties. The recovery has also positively impacted lending institutions and led to the emergence of several lending trends for commercial real estate.

This blog will address and explore these trends and provide guidance about the best way to capitalize on them in the current economy.

Lending Trends for Commercial Real Estate

Following are some of the vital lending trends that will affect your experience as a commercial real estate investor:

1. Investor-Driven Lenders are Regaining Market Share

Conventional lenders like investor-driven debt funds suffered the worst impact of the pandemic when commercial real estate transactions slowed down. They were barely generating revenue and lost much of their market share to banks due to uncertainty.

However, data for 2021’s Q4 shows positive growth and a return to the pre-COVID numbers. Investor-driven lenders have captured 15% of conventional loan market share, an even higher number than their pre-COVID achievement.

There is speculation over whether this boost will last, but the market seems to be moving steadily for now.

2. Average Lending on Multifamily Has Reduced

Multifamily units saw increased demand when remote work became a norm, but lending trends indicate that the change was temporary. The average lending for multifamily units has already reduced, and most of this change is demand-driven.

More and more commercial real estate investors are looking to put money behind projects with higher returns, hoping to make up for lost profit. Multifamily units are a safe investment, but they don’t have the highest returns, so you’ll need to consider whether or not you want to add more to your portfolio.

3. There is Significant Capital Available

The lack of significant commercial real estate transactions has left lenders with extensive capital. This means that they are in a position to offer lucrative deals, and crafty negotiations can help you get a mutually beneficial lending arrangement.

CHRE has been in the commercial real estate business for several years, and our team members are negotiation experts. We can help you find the right deals with the most reasonable payment terms. We also have an extensive network in Rio Grande Valley, so you can rely on us to connect you with the most reliable and investor-friendly lenders in the area.

4. Favorable Terms for Environmentally Sustainable CRE

Lastly, some lenders are offering more favorable terms to environmentally sustainable real estate, so you should consider adding a few to your portfolio. However, such offers are highly dependent on state legislation.

Texas has maintained a relatively neutral stance on environmental sustainability, so fewer lenders create this distinction in the region.

Wrapping Up

Overall, lending trends for commercial real estate have transformed extensively over the past few quarters. The best solution is to make the most of the existing lending situation and plan for future changes.

Please don’t hesitate to connect with our team for any inquiries about commercial real estate in Rio Grande Valley. We will help you find the best deals.