The StackSource team recently attended the 2022 Mortgage Bankers Association’s Commercial Real Estate Finance Conference in San Diego. The main theme amongst capital providers was that 2021 was a great year, and they are all expecting to do even more business in 2022.
What else was on the minds of our strategic lending partners including debt funds, private capital, banks, agencies and CMBS originators?
We saw three clear themes in their outlook for the year ahead:
The Federal Reserve has made it clear that, in an effort to control inflation, markets should expect higher rates in 2022. Although this should theoretically signal a slowdown in market activity, the overall sentiment from the conference proved otherwise. Lenders are expecting even stronger origination volumes in 2022 versus 2021.
A very interesting perspective that we heard in one of our meetings revolved around the idea of increased competition. As lenders increase 2022 allocations, there will be increased competition for lenders to win good deals. More competition may lead to new financial products and/or creative financing structure that ultimately benefit CRE developers and investors.
There was a clear favoritism for “Sunbelt” states and “Smile” states. These are the current hot markets where most lenders want to place capital. The reasons for this trend is a topic of a future blog post, but at least we can visualize what these terms mean.
Lenders are still very much in favor of multifamily and industrial properties. This has been a common theme for several years now. Build-to-rent housing strategies is a relatively newer real estate product type that many lenders are eager to finance.
The depths of the pandemic had many lenders hitting pause on hospitality, retail, and office financing. There was just too much risk given that the short- and medium-term future was too hard to predict with even a small degree of certainty. At the conference, it was nice to hear more lenders ready to get back into retail and hospitality (still with heavy scrutiny, but there was a general feeling of increased openness).
Office still sounded tough for most lenders unless the property was located in a primary market, operated by an experienced sponsor, and included a solid business plan.
Overall it was a great conference and an amazing opportunity to reconnect with familiar faces. After a two year hiatus from conference life, opportunities like this (that we once took for granted) now have a renewed freshness. Special thank you to the Mortgage Bankers Association for organizing this event, and we wish everyone a safe and successful 2022 and beyond.
Good luck out there my friends.
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