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Commercial Real Estate Lending: 2016 CRE Facts to Know

Posted by:  Jim Morstad
2016-09-22 15:35:19

Commercial Real Estate Lending: 2016 CRE Facts to Know


  • Commercial space is heavily concentrated in large buildings, but large buildings are a relatively small number of the overall stock of commercial buildings.
  • The commercial real estate market is bifurcated, with the majority of buildings (81 %) relatively small but with the bulk of commercial space (71%) in the larger buildings. 

  • Commercial sales transactions span the price spectrum. 
  • CRE deals at the higher end - $2.5 million and above - comprise a large share of investment sales, and generally receive most of the press coverage.
  • Smaller commercial transactions tend to be obscured given their size. However, these smaller properties provide the types of commercial space that the average American (and Balboa Thrift and Loan borrower) encounters on a daily basis - e.g. neighborhood shopping centers, warehouses, small offices, supermarkets, etc.

  • These are the types of buildings that are important in local communities, and REALTORS® are active in serving these markets.
  • Commercial real estate in small cap markets maintained its upward momentum during the first half of 2016, with REALTORS® reporting continued improvement in fundamentals and investment sales.

  • Following on Q1 2016's 8.5% increase in sales volume, Q2 transactions rose 8.4% on a yearly basis.
  • The proportion of members who closed deals in Q2 2016 advanced to 66%, from 58% in Q1. 
  • The direction of commercial business opportunities during Q2 2016 rose 5.6% from the prior quarter.
  • The average transaction price was level at $1.4 million in Q1 and Q2 2016.
  • With banks tightening underwriting standards for commercial loans in the wake of increased regulatory scrutiny, financing availability increased as a concern in REALTORS®' markets - 15% of members ranked it as a main challenge in Q2, up from 7% in Q1. 

Balboa is actively looking to increase the number of CRE transactions and loan amounts we close. Contact us with your lending questions and deals. Our commercial real estate lending program is designed to help you - the residential real estate agent, broker, or REALTOR® - close more loans.

In turn, that has a threefold impact. 

1. You get to cash more commission checks.

2. You get to help improve your borrower's financial situation. 

3. You become an integral part of improving the local economy by helping your borrower and local neighborhoods.

Contact us at your convenience to discuss your clients’ commercial real estate lending needs. You can also sign up on our website to become an approved broker today.

Jim Morstad, Vice President of Commercial Real Estate