The second half of 2013 should be an extremely busy time for the commercial mortgage industry. In fact, the commercial loan business may be poised to enjoy one of its busiest spurts in history.
- U.S. commercial banks are sitting on over $2 trillion in excess reserves. In plain English, they have lots of money to lend.
- Part of my job as the owner of C-Loans.com, the largest of the commercial mortgage portals, is to call bankers on a daily basis and solicit them to join C-Loans. Every bank with whom I have spoken for the past three weeks had an appetite to make more commercial real estate loans.
- It takes two to tango. Even if our commercial banks are in fact hungry to make more commercial mortgages, they cannot force business owners and investors to borrow. The limiting factor today is a lack of demand for new commercial mortgages by borrowers. Few borrowers are applying for commercial loans.
- By mid-2013 it should become clear that the U.S. economy is roaring back, and business owners and commercial real estate investors should start dusting off their borrowing plans.
- Why has the automotive manufacturing business been so robust for the past two years? The answer is that the auto industry produced relatively few new cars between 2007 and 2011. Demand for replacement automobiles built up. I believe that the same thing is happening is commercial real estate finance. Commercial real estate investors have almost fully-depreciated many of their commercial properties. If they don't trade-up soon, they will face painful taxes. Business owners have put off expansion plans for six years. If they don't expand and innovate pretty soon, many of them no doubt sense that they will fall fatally behind their competition. It's innovate-or-die time. To do this they will need cash.
For the reasons outlined above, I predict they the second half of 2013 will be just about the best time in history to be in the commercial mortgage business.