You are currently browsing the Fairviewlending Blog weblog archives for June, 2008.
Archive for June, 2008
I’m often asked how commercial real estate has been impacted by the recent spike in oil prices. With the recent rises in gas, ripple effects can be felt throughout the commercial property sector. For this blog, I will focus on one group that has been impacted: the retail strip mall. During the last five years a plethora of small/midsize strip malls were constructed. Many of these strip malls were finance or purchased based on a very low cap rate (5-7%) and very high $/ft rental rates.
As gas prices have increased many of the smaller tenants are struggling and unable to afford the high initial rents. As a result many are moving to lower rent centers or renegotiating their current rents. This trend has accelerated as gas prices have continued to rise.
I am frequently asked if the residential mortgage crisis has impacted commercial lending. Unfortunately the resounding answer is yes. Small Balance commercial lenders and hard money commercial lenders have been tremendously impacted by the credit crisis. In this blog I will discuss one impact of the current credit crisis. Future blogs will delve into further impacts that have occurred/are occurring.
As a result of the crisis, underwriting standards have changed substantially for both small balance lenders and hard money lenders. Many of the players in this arena are no longer in business. If the lenders are still in business the parameters for writing loans has changed drastically