IT MAY BE A SLOW, BUMPY RIDE, BUT THE ROAD IS LOOKING CLEARER FOR THE COM-
MERCIAL REAL ESTATE FINANCE INDUSTRY. THIS MONTH’S SCOTSMAN GUIDE LAYS OUT
SOME OF THE UPS AND DOWNS, AS WELL AS IDEAS FOR KEEPING STEADY.
First, here are some key stats to keep in mind: In 2010, commercial and multifamily originations increased by 44 percent over 2009 to almost $119 billion, the Mortgage Bankers Association reported.
Despite the increase in transaction activity and commercial mortgage-backed securities
(CMBS) issuance, there is still cause for concern. This past April, the CMBS delinquency rate
reached 9.65 percent, increasing 23 basis points from the previous month, according to Trepp
LLC. This is the highest delinquency rate in the CMBS market’s history, Trepp says, and also
the largest month-to-month increase since this past December.
Some property types are seeing better days than others. In this month’s Property TypeCast,
Reis Inc.’s Victor Calanog predicts another tough year for the retail market. Retail’s record-high
vacancy levels this past first quarter were in stark contrast to the recovery seen in the multifamily and office sectors, Calanog points out on Page 16.
Also, some government programs may help bolster commercial real estate’s recovery. The
U.S. Small Business Administration (SBA) has expanded its 504 loan program to include refinances; Steve Smits, SBA’s associate administrator in the office of capital access, talked to us
about the program’s impact on commercial real estate for this month’s Q&A (Page 16). Also,
Mark Feathers of Small Business Capital LLC lays out some of the selling points of SBA loans
in his article on Page 34.
Loans available via the Community Reinvestment Act (CRA) also can help. Through CRA loans,
you may be able to close hard-to-fund deals for clients at your local bank. Todd Sears of Herman & Kittle Properties Inc. tells you how on Page 21.
In addition to Opper’s ideas, another way you can capture new business is to reach out to the
industry and show off your expertise. Wondering how you can do that for free? It’s easy: Write
an article for Scotsman Guide. Our editorial model is built on reader-generated content, and
we’d love to hear from you. Visit sctsm.in/write for more details — or feel free to contact me
directly for information.
… in July’s
Scotsman Guide
• Know the steps of
environmental due
diligence
• What’s in a name:
private money vs.
hard money
• Underwriting’s effect
on your business
• How mighty
is Missouri’s
commercial real
estate?
Poland sustained positive gross domestic product (GDP)
growth throughout the economic downturn. The World
Bank anticipates the country’s GDP will grow by 4 percent
this year and 4.2 percent in 2012. Apartments are booming in Poland, particularly in the low-end market segment.
This past first quarter, 10,736 apartments were brought
online in the country’s top six markets, according to research company REAS. There is, however, some concern
the market will become oversaturated as more properties
are built. In Warsaw, Neocity Polska has begun work on
a six-building residential complex housing 303 units. RED
Real Estate Development also is working on a project with
150 units in Warsaw, as well as additional developments in
Poznań and Wroclaw.
First-quarter GDP hits weak expectations
WASHINGTON, D.C. — The U.S. gross domestic product
(GDP) for this past first quarter was in step with weak
expectations, the Commerce Department reported.
In the first of three official estimates, first-quarter economic growth was pegged at 1.8 percent compared to
the fourth quarter of 2010, a sharp drop from the 3.1
percent growth in the previous three-month period.
The slowdown was attributed to “a sharp upturn in imports,” as well as a significant decrease in government
spending, the department said.
The Commerce Department said consumer spending increased 2.7 percent in the first quarter, a positive sign, but
not as encouraging as the fourth quarter, when spending
increased 4 percent.
Consumer confidence increases
NEW YORK — U.S. consumer confidence improved this
past April after dropping in March, the Conference
Board reported.
The monthly Consumer Confidence Index fell from 72 in
February to 63.4 in March but regained what it lost in
April, climbing to 63.8.
The Expectations Index, measuring consumer confidence in the economy six months down the road, also
increased from 81.3 in March to 82.6.
In April, the monthly survey of 5,000 households found
the number of respondents indicating economic conditions were “good” fell “slightly” the report said, dropping to 14.8 percent from 15 percent. The number of respondents indicating conditions were “bad” also fell,
shifting to 36. 4 percent from 36. 6 percent.
Consumer spending up
WASHINGTON, D.C. — Consumer spending increased by
0.6 percent and incomes were up 0.5 percent in March,
according to the U.S. Bureau of Economic Analysis.
The bureau said the rate of spending slowed from February, revising the gain in the second month of the year
from 0.5 percent to 0.9 percent in its latest report.
For March, disposable incomes increased by 0.6 percent compared to February.
In March, private wages and salary disbursements increased by $18 billion, compared with a $16.4 billion
increase in February. Payrolls at goods-producing firms
increased by $6.2 billion with manufacturing payrolls
up by $5.1 billion. Service-oriented firms increased
their payrolls by $11.8 billion in March, about half the
lift of the previous month.
Durable-goods orders increase
WASHINGTON, D.C. — U.S. durable-goods orders increased 2.5 percent this past March to $208.4 billion,
according to the Commerce Department.
In March, durable-goods orders had risen in only two of
the previous six months. In February, orders for items expected to last three years or more declined by 0.9 percent.
Excluding the biggest items in the durable-goods category — planes, trains, ships and trucks — orders increased 1.3 percent. Excluding defense, new orders increased by 2.3 percent.
