According to Jones Lang LaSalle’s 2011 Lenders’ Expectations report, lending for commercial estate sales is still limited by banks. The current financial and debt crisis in Europe is taking its toll on the commercial market. Investors are still optimistic that the market will turn around and lending will become more readily available. With the decrease in lending it seems as if the Loan-to-Value ratio is currently right around the 60% mark. Most of the banking industry is stay around the $100 million cap but expect that in 2012 when the bulk of this crisis is behind us to be back to lending upwards of $600 million.
Commercial estate investors call this a temporary set back that will eventually pass an the market will be back on its feet. The current state of commercial lending seems to be in refinancing. Owners are looking for better rates to help them get through this time of economic crisis.
Lenders are looking more closely at the risks involved in commercial lending. The Financial Services Authority (FSA) stated that lenders in the UK need to be aware of these risks and have an exit strategy in place in the event the investment doesn’t work out. Commercial estate sales are always going to be in demand as businesses are always being developed. Getting through the crisis will prove challenging but this too shall pass. While lending is limited it is not non-existent.
Previous Post
Drumming up interest in your serviced office space
