Economy Watch: ABA Bullish on CRE Lending

By Dees Stribling, Contributing Editor

U.S. commercial real estate lending is robust, according to the American Bankers Association’s first-ever Commercial Real Estate Survey, released at the organization’s Real Estate Lending Conference in San Antonio on Tuesday. Fully eight in 10 banks surveyed said they plan to increase their CRE concentrations in 2016.

Currently, 19 percent of the surveyed banks have construction concentrations of more than 100 percent, while 9 percent have CRE concentrations of more than 300 percent. The most active asset classes—accounting for 62 percent of banks’ total CRE portfolios—are multifamily, office and retail.

Bankers cited competition from other banks as their biggest challenge when it comes to CRE lending—not, as it happens, the difficulties involved in dealing with regulatory requirements, or even competition from non-banks. Even so, the bankers said they were concerned about regulatory burdens, low capitalization rates, increasing interest rates, as well as economic and market conditions.

The ABA survey attracted participation from 136 banks, with data collected from early February to late March, in most cases reflecting calendar-year or year-end results. Of participants, 77 percent were commercial banks and 23 percent were savings institutions. About 61 percent of the participating institutions had assets of less than $1 billion.