Real estate lending has undergone a revival recently, with more borrowers seeking loans, banks more willing to make them, and investors happy to buy the loans. As of this year, banks have been easing their credit terms, which has facilitated more loan activity.
The Federal Reserve Board reported this week that 21.9 percent of banks surveyed last month said they had eased credit standards for commercial real estate loans in the third quarter of this year, while only 2.7 percent reported tighter standards.
According to the Wall Street Journal, an increase in commercial property values throughout the US has enabled banks to dispose of “distressed office buildings, shopping centers, hotels and other real estate that they reluctantly took over during the financial downturn.” That has helped banks improve their balance sheets and transferred thousands of properties to new investors who have breathed new life into them.
The trend of eased standards and heightened loan activity is a key factor in increasing commercial real estate transactions, particularly in the realm of office space. The new ownership groups will likely re-invest in their properties in terms of physical improvements and increased marketing efforts, resulting in rising rents and decreasing vacancy rates-hopefully their efforts will result in increasing return on investment and ultimately aid in job growth in the future.
What do you think will lead to the most job growth?