Can CRE Activity Sustain Through the Macroeconomic Shocks?
Retail Traffic reports: Between the recent downgrade of the US's credit rating to the downward revision of first quarter US GDP to weak indicators on manufacturing and consumer spending, the US economy’s recovery has been widely called into question over the past month. Yet, what does that mean for the commercial real estate market’s own recovery?
Retail Traffic recently cited Real Capital Analytics’ (RCA) projection that commercial real estate transaction volume will reach $200.0 billion in the US this year, or comparable to 2008’s level of activity, to state that the industry may have enough wind in its sails to offset some of the turbulence in capital markets. On the other hand, Mortgage Bankers Association Vice President Jamie Woodwell reminded Retail Traffic that, “Property values and interest rates - coupled with job growth, consumer spending, household growth and other macro-economic trends that drive demand for commercial real estate - will be keys to how property owners seek and qualify for mortgage financing going forward.”
Loosening of credit markets has been a driving factor behind the commercial real estate markets recovery, and CMBS specifically is a major source of debt for transactions. RCA Managing Director Dan Fasulo told Retail Traffic that, “We’re getting close to the point where the market cannot continue to see tremendous growth without CMBS as a source of liquidity…There are a lot of deals where borrowers can engage balance-sheet lenders directly. But that can’t go on forever.”
View the full article on Retail Traffic: Can CRE Activity Sustain Through the Macroeconomic Shocks?
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Posted by: Nina Turner