Florida commercial real estate developers are likely aware of an impending financing crunch. 2015 was a year of slow growth for the real estate lending industry, but 2016 promises to result in even fewer risky real estate loans. The head of commercial real estate at Wells Fargo has stated that the industry is approaching 2016 with far more caution as it enters the latter portion of a six-year recovery cycle.
Slow economic growth has a major effect on commercial real estate lending trends as a downturn in the economy corresponds to a downturn in demand for commercial real estate. The Federal Reserve released a survey that revealed how hesitant senior loan officers are to approve commercial credit lines. There is a surplus of luxury real estate in Miami, Manhattan and many other cities around the country, and there are not enough buyers to make these projects a secure investment in the eyes of most banks.
One investment firm executive believes that the bar for commercial real estate investments is much higher than it once was. The commercial mortgage bond market is dramatically slowing down. Bank of America reduced its forecast for commercial mortgage backed securities in 2016 by 30 percent due to this decelerating trend.
While getting a line of credit for a commercial property investment is more difficult in 2016 than it was in 2015, working with a real estate law attorney could help developers of office buildings and other commercial real estate projects. An experienced attorney can often recommend alternative and creative methods of obtaining the financing that is needed.