Both supply and demand for commercial real estate loans, a source of funds for office, retail, warehouse and hotel construction, appear to be shrinking.
That opinion, from a February Commercial Mortgage Alert, and shared by many in the construction industry, is based on the results of a January Federal Reserve Senior Loan Officer Opinion Survey by the Associated General Contractors of America.
About 80 percent of domestic banks said they tightened their lending standards on commercial real estate loans from the three months beginning in November.
“The net fraction of domestic banks reporting tighter lending standards on these loans was the highest since this question was introduced in 1990,” the report said, adding that 56 domestic banks and 23 foreign-owned banks responded to the survey. “Concerning loan demand, about 45 percent of both domestic and foreign respondents…reported weaker demand for commercial real estate loans over the past three months.”