{"id":1004496265,"date":"2020-11-30T06:52:05","date_gmt":"2020-11-30T14:52:05","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004496265"},"modified":"2020-11-30T06:52:05","modified_gmt":"2020-11-30T14:52:05","slug":"under-pandemic-pressure-capital-markets-adapt","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/under-pandemic-pressure-capital-markets-adapt\/","title":{"rendered":"Under Pandemic Pressure, Capital Markets Adapt"},"content":{"rendered":"
\"\"<\/a>

Photo by Jane Palash via Unsplash<\/em><\/p><\/div>\n

The players have shifted positions, in some ways rather significantly, but the game continues, according to Beyond the Global Health Crisis<\/a>, a special fourth-quarter capital markets report from Marcus & Millichap.<\/p>\n

As some categories of lenders have stepped back from commercial real estate, others have stepped up their lending. And as these adjustments take place, investment activity is making a steady recovery and low interest rates help to motivate investors.<\/p>\n

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READ ALSO: <\/strong>Bernanke Weighs In on CRE During Marcus & Millichap Panel<\/a><\/p>\n

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As the end of a tumultuous year approaches, the report notes, \u201cthe lending landscape has vastly improved from the onset of the pandemic, which brought lenders and investors to pause as they assessed the impact of the coronavirus.\u201d<\/p>\n

Further, proactive steps by the Fed have kept debt capital \u201cfar more abundant than during the global financial crisis.\u201d Both buyers and lenders have become more active since the second quarter, though sales activity is down substantially year-over-year.<\/p>\n

Unsurprisingly, many lenders have tightened underwriting criteria, reducing the options for some borrowers. \u201cWhile liquidity has remained ample, loan-to-value ratios contracted as the health crisis unfolded, now resting in the 50 to 70 percent range,\u201d depending on the deal and borrower, according to Marcus & Millichap. Alongside this, debt service coverage ratios have shifted, rising to the 1.6x\u20131.9x range.<\/p>\n

The challenges of change<\/h2>\n

Compared with 2018\u2019s lender mix, that of mid-2020 showed a huge drop in CMBS, a steady rise in the role of regional and local banks (across most property types), and a large increase in activity by government agencies. The latter, Marcus & Millichap says, \u201cwere aggressive originators in recent quarters to account for a much larger share of lending activity.\u201d Still, multifamily mortgages now often require debt service reserves and much underwriting assumes no rent growth for about the next two years.<\/p>\n

Product types favored by lenders are multifamily and industrial. The report states that lending by banks and non-agency lenders most often involve five- to seven-year loans with rates in the upper-2 percent to mid-3 percent range.<\/p>\n

As to office properties, most lenders are more selective, despite strong rent collections. Suburban office deals are preferred, while buildings in larger downtown markets can require loan-to-values of nearly 50 percent for.<\/p>\n

Life insurers reportedly have been targeting lower-leverage office deals, as well as multifamily and single-tenant retail assets.<\/p>\n

\u201cThe Federal Reserve\u2019s commitment to keep the federal funds rate near zero through at least 2023 should hold interest rates near historical lows over the coming quarters,\u201d the report concludes, \u201cproviding commercial real estate investors with compelling risk-adjusted returns in contrast with other asset classes.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A special report from Marcus & Millichap suggests that, despite all of the pandemic\u2019s disruption to the CRE sector, the capital markets side is adapting quite well. <\/p>\n","protected":false},"author":882,"featured_media":1004487811,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,21783,23891,21742],"tags":[34836],"class_list":["post-1004496265","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-investment","category-national","category-latest","tag-marcus-millichap"],"acf":[],"yoast_head":"\nUnder Pandemic Pressure, Capital Markets Adapt - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/under-pandemic-pressure-capital-markets-adapt\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Under Pandemic Pressure, Capital Markets Adapt\" \/>\n<meta property=\"og:description\" content=\"A special report from Marcus & Millichap suggests that, despite all of the pandemic\u2019s disruption to the CRE sector, the capital markets side is adapting quite well.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/under-pandemic-pressure-capital-markets-adapt\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2020-11-30T14:52:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2020\/10\/jane-palash-A51dkNMRu9A-unsplash-e1603857418192.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/under-pandemic-pressure-capital-markets-adapt\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/under-pandemic-pressure-capital-markets-adapt\/\",\"name\":\"Under Pandemic Pressure, Capital Markets Adapt - 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