By Steve Bergsman
During the Great Recession the big national banks were so hard hit that many of them locked away their checkbooks. If you thought it was tough to get a loan for
a residence, it was even harder to find capital for commercial
real estate development. Indeed, many long-term relationships
between developers and investors and too-big-to-fail banks
were severed and remain so even today. Three years into
recovery, some of those ties no longer bind.
Stepping up to fill the gap in funding were the local and regional
banks and credit unions — at least at the lower end of the dealmaking spectrum in the $1 million to $10 million range.
In Columbus, Ohio, Bradford Kitchen, SIOR, president
of Alterra Real Estate Advisors, comments, “we’ve not even
bothered to go to the large banks because they weren’t financing
many deals. In the height of the downturn they were sending
clients to other banks. A lot of smaller banks took business,
financing a lot of deals where the large lenders weren’t.”
The story is not much different in the suburbs of Boston.
Arlon Brown, SIOR, a senior vice president with Parsons
Commercial Group in Framingham, Mass., notes, “for me, it’s
been the community and regional banks.”
The community banks took up the slack during the recession
from some of the national banks in the Boston metro area,
Brown adds. “The local banks hired more sophisticated people
and did a great job. For loans of less than $5 million the
community banks certainly are competitive.”
Now, with the economy in bloom once again, and with the
banks having put most of their troubles behind, they want
back in the game. Except the competition is pretty solid with
local banks, credit unions, conduit players, life companies, and
private equity pools all wanting to place money.
As the too-big-to-fail banks departed
the commercial real estate sector
during the Great Recession, local and
regional stepped up to the plate. Now
the big banks are back, but the financial
giants face a competitive landscape.
Financing is easy to access, good deals
are getting harder to find.