GRS Group had a team of commercial real estate professionals at the recent MBA CREF meeting in Orlando, Fla. They attended several sessions and were busy networking with clients and colleagues during the vast number of industry receptions. Here are a few insights they came back with:
Julie Sorenson, a director with GRS | Corteq, had this to say:
“Clients are coming off of a great year. Despite ample capital available for borrowers and intense competition to make loans, most clients reported a banner year in volume. They are projecting similar volumes in 2016.
Attendees did not seem to be too affected by the projected moderate rate increases, as absolute interest rates are still quite low.
In the lending arena, we help our clients identify, quantify and manage the physical and environmental risks associated with a real estate transaction.”
Tony Mueller, another GRS | Corteq director, had a different take on the conference:
“CMBS lenders are nervous and some people are predicting a smaller field of players by end of year,” is what he reported.
Meanwhile Amy Regal, with GRS | Title, while optimistic in general, had tepid comments about CMBS and major markets:
“While overall CRE fundamentals are strong, there are concerns about the CMBS market. The amount of providers will most likely be reduced in 2016…what number that equates to is yet to be known. I would say the general feel is that there is a possible bubble but not to the extent that we saw in 2007 and 2008. A comment I heard from a couple of clients is that the bubble will be more pronounced in gateway cities (i.e. Boston, Washington, Miami, and the same on the West Coast). That’s good news for the Midwest.”
David H. Stevens, president and CEO of the MBA agreed that overall fundamentals are solid—and gaining strength—across product types. He furthered that commercial real estate in the United States is the fourth-most popular investment in the world. Multifamily mortgage lending is also expected to increase overall this year.
One problem with the success of multifamily, however, has to do with rents. Stevens pointed out, as rents continue to rise in several cities, there is the question of whether or not renters are going to be able to afford the upward pressure. He added affordable housing needs to be a priority for the commercial real estate industry to help resolve this issue.
Another interesting point that Stevens mentioned was that, with lower unemployment figures, commercial real estate employers are going to have a more difficult time finding the right talent for open positions.
All that said, in the end, strong commercial real estate fundamentals, a vigorous demand for assets and low unemployment aren’t the worst problems to have.
What do you think?