Below are a few commercial real estate trends to look out for in 2017:
Interest Rates – According to the Federal Reserve interest rates will go up by a quarter of a percentage point. Also the treasury yield increased by more than 50 basis points since the presidential election. Higher interest rates typically mean we are in for a strong economy, which means a stronger commercial real estate market. Commercial real estate deals harder to make, however lenders and borrowers will be more cautious and reduce risks.
Non-bank lending – Definition here. Basically Institutions other than banks, credit unions, etc that offer loans to consumers. Examples might be insurance companies, mortgage originators/brokers, investment banks, etc.). CMBS (commercial mortgage backed securties) lending has slowed down. Blackstone is a non-bank lender that has picked up some of the slack.
Financial Legislation – Donald Trump does not like the Dodd-Frank Act and wants to dismantle it because he thinks it too much. Some experts say that the excess requirements stifle lending. If standards are too relaxed then lending practices pose more risk and could lead to another financial meltdown.
Wall Street and White House Picks – Who Donald Trump picks to work in the White House will inevitably determine what regulatory changes will be made.
Foreign Investments could be on the downswing. China has indicated that they will invest less in U.S. commercial real estate properties.
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