JANUARY ISSUE: Finance–Sea of Liquidity

Will financing volume expand further in 2015?

Fred Schmidt, president & COO of Coldwell Banker Commercial, believes debt and equity capital will be more available in 2015. And that’s good news—at least for now—for the recovering commercial real estate market.

The Mortgage Bankers Association has forecast originations by mortgage bankers will rise by 8 percent by the end of 2015, after an estimated 6 percent bump-up last year. That is still a far cry from the whopping double-digit volume pumps during 2011-13, immediately following the Great Recession. But by the end of this year, total commercial/multifamily originations by mortgage bankers will be substantial—at $407 billion, according to the MBA—almost back to the 2007 peak level of $508 billion. Notably, at an expected $173 billion, multi-family financing in particular should exceed its 2007 peak volume of $148 billion.

That makes for plenty of liquidity to drive the commercial real estate market. If anything, capital appears to be constricted currently by the dearth of appropriate commercial real estate opportunities, rather than by the amount of capital available, at least in the primary and, increasingly, secondary markets. “Everyone complains that there is a lot more money than good deals. … Capital is more aggressive because there are fewer properties; there is a lack of quality out there,” said Danny York, president of Franklin Street Capital Advisors.

Read the full article in the January 2015 issue of CPE. Access is free!