Commercial Real Estate Construction Lending Growing Faster Than Traditional Loans

NEW YORK CITY—Here is an interesting factoid about the commercial real estate bank lending market: Currently bank lending for construction and development is growing faster than lending for completed buildings, according to a soon-to-be released independent analysis by Chandan Economics of call reports filed by banks with the Federal Deposit Insurance Corp.

This is in marked contrast with recent history, Sam Chandan, president and Chief Economist of Chandan Economics and an adjunct professor in real estate and public policy at the Wharton School of the University of Pennsylvania, tells “Over the last year,” he says, “the balance of construction loans held by banks has grown by nearly 15%.”

That compares to a 4.1% growth of commercial loans on bank balance sheets from Q1 2014 to Q1 2015 and a 12.4% increase of multifamily loans during the same time period.

It is little secret that bank lending for commercial real estate has largely recovered from the recession. But the stepped up pace of construction lending is a new twist, and very illustrative. Even as signs mount that the current cycle is well into the latter stages and the US economy may or may not be faltering, banks continue to pursue the real estate asset class, including riskier development activity.

The ever-declining default rates have much to do with this trend.

Story continued at

Get Social

2 class "A" office suites available for lease| STE 101 - 957 SF: 1st floor, private entrance, 2 private offices and 3rd possible conf room| STE 302 - 581 SF: 3rd floor, 1 private office, 1 cube area #CRE #CommercialRealEstate #OfficeForLease #OfficeForRent

Just Listed | 1,250 SF professional office/retail space in Allentown | Highly desirable location at corner of signalized intersection near Hamilton Crossings #CRE #CommercialRealEstate #OfficeForLease #OfficeForRent #RetailForLease #RetailForRent

150,000 SF Industrial warehouse for lease in Allentown | 146,000 SF warehouse w/ 21’ ceiling height. 16 Docks, 1 drive-in & rail to building #CRE #CommercialRealEstate #WarehouseForLease #WarehouseForRent

Load More...