Page 30 - Scene Magazine 42-07 July 2017
P. 30

Real Estate Scene
Confidence in Commercial Market Continues – Realtors® See Challenges in Financing
BY KATHY PERRETT
Realtors® special- izing in commercial real estate should have confidence that growth in the mar- ket will continue, although one hurdle that continues to af- fect the market is the
lack of available financing to small com- mercial real estate investors, due in large part to regulatory uncertainty.
Unemployment has declined to 4.4 percent and consumer confidence is at its highest point in 15 years. A rising interest rate environment is likely to halt commer- cial price growth or even cause a minor decline, an outlook supported by the grow- ing economy and the over 2 million jobs gained in the past year.
Global commercial investments have also slowed, which in the first quarter of 2017 decreased nearly 20 percent year- over-year; however, certain U.S. markets are seeing good global cash flow with $76 billion flowing to the U.S. International
buyers are likely to play a greater role in the U.S. market this year. During the past five years, a near majority of Realtors® ex- perienced an increase in the number of in- ternational clients; we expect international buying activity to grow in 2017, which will have an overall positive impact on the commercial market’s ongoing recovery.
One major obstacle that continues to affect the market is the lack of available financing to small commercial real estate investors. Realtors® are seeing evidence of markets being impacted by regulators’ increased scrutiny of banks’ balance sheet allocations to commercial real estate loans. Considering that 64 percent of Realtor® clients get their financing from banks, this is likely to impact transaction flow as lend- ing conditions tightened in 37 percent of Realtors®’ markets, a four percent increase from last year.
According to the National Associa- tion of Realtors’ Commercial Real Estate 2016 Lending Survey, Realtors® reported a significant drawback when it came to financing for buyers of properties under
$2 million, which makes up 83 percent of Realtors®’ clients in the commercial sec- tor. These small businesses are typically financed by private investors or local and regional banks. Thirty-five percent of com- mercial members reported they had com- mercial transactions fail in the past year due to a lack of financing.
Battle Creek Area Association of Real- tors® said regulatory uncertainty of finan- cial institutions are accounting for the lack of capital in commercial lending for small- er properties. BCAAR along with NAR be- lieve in protecting and enhancing the flow of capital to commercial real estate.
Realtors® build communities, and those who own or invest in commercial real es- tate spaces help strengthen those commu- nities and support millions of jobs nation- wide. It’s imperative that we continue to advocate for enhancing the flow of capital to commercial real estate.
Contact the Battle Creek Area Associ- ation of Realtors® at (269) 962-.5193 or visit our website http://bcaar.com to learn more about commercial real estate.
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