By Dan Rafter
Optimistic. That’s what officials at Farmington Hills, Mich.-based Friedman Integrated Real Estate Solutions are about the future of commercial real estate lending.
Developers should find it easier today — and in the future — to acquire the financing they need to build new retail centers, expand existing office buildings or build new spec industrial buildings.
“It is an excellent time to be a borrower,” said David Friedman, president and chief executive officer of the company. “With interest rates at historic lows and CRE loans at an all-time high, investors should take advantage of the opportunities available to them across diverse property types.”
Friedman points to a recent report by CoStar.com saying that CRE loans soared in the fourth quarter of 2013, with originations for commercial bank portfolios increasing by 54 percent from the same quarter last year.
Friedman said that the office and multi-family markets are especially poised for growth in 2014 and beyond. The CoStar Group’s list of 2014 outlooks from industry leaders pointed to both of these markets as ones to watch.
What’s spurring this upward trend in CRE lending? Friedman cited the near-record-low interest rates. Janet Yellen, chairwoman of the Federal Reserve, has said — recently at a speech before the National Interagency Community Reinvestment Conference — that the Fed plans to keep these rates low, something that can only be good for CRE lending. Yellen told the conference that the Fed’s goal is to make it less expensive for businesses to build, expand and hire.
In Friedman’s home market of Detroit, banks have re-entered the CRE lending business in solid numbers. Friedman points to a Jan. 26 Crain’s Detroit Business report saying that Flagstar Bancorp Inc., the largest bank headquartered in Michigan, saw commercial lending jump by $150 million to $386 million in the first nine months of 2013. The same story reported that the Bank of Ann Arbor grew its commercial loan portfolio by $54.6 million or about 12 percent in 2013.