Thursday, February 28th, 2019 February28th2019

Sell for More News: Lenders are pumping their brakes

Published on February 28th, 2019

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.

 

The nation’s largest lenders have tightened their commercial real estate loan criteria as the US economic expansion matures. Banks are being more cautious, based on what they’re saying on their earnings conference calls.

The same headwinds that slowed bank lending last year are extending into 2019, as economists debate how much longer the current economic expansion can continue. Interest rates are projected to keep going up.

JPMorgan Chase reported commercial real estate loans were up 2% in the 4th quarter, less than its recent pace of about 3.9%. That was below the industry average of 4.5%.

“In mature markets we’re being pretty prudent,” JP Morgan Chase said. “I won’t call it tightening, but being very selective. We’re going to protect profitability and credit discipline over growth at this point.”

Wells Fargo gave a similar outlook for 2019.  “Commercial real estate loans were down from the third quarter and have declined for seven consecutive quarters, reflecting continued credit discipline,” reported Wells Fargo’s CFO.

This is what a softening market looks like, folks. Buyers and their lenders get more cautious. Buyer reluctance to pay top of the market prices results in more properties sitting on the market unsold.  Eventually the bid-ask spread will tighten but it’s going to take some time.

The deals that get done this year will involve reasonable sellers that have the correct perspective on the shifting market.

 


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About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Prowess IRES which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 414.324.4938, 615.603.9770, click to schedule a call or Beau@ProwessIRES.com