|Bank Survey Finds Tempered Outlook for Commercial Real Estate
SAN FRANCISCO, CA (March 19, 2002) -- A recent survey of commercial real estate lending officers at banks throughout the country found that lending conditions in the sector are tighter and that a neutral outlook for 2002 predominates. The survey, conducted by Northern California-based Bridger Commercial Funding in late February, reflects the viewpoint of 158 senior loan officers from 111 banks across the nation.
Lending activity in 2002 should be flat to higher, according to survey participants. Forty-three percent expect 2002 loan volume to approximate 2001 levels while 36% expect increased lending this year. Survey results of borrower demand were similar, with 41% of lenders anticipating moderate borrower demand and 31% expecting somewhat increased demand.
"The moderate outlook reflects the tepid economic conditions that prevailed during much of 2001, along with the approaching low point in the real estate cycle," stated Greg Saunders, Executive Vice President of Bridger Commercial Funding. Many sector indicators suggest that 2002 will be the cyclical low for commercial real estate, and that recovery will take hold in 2003, Saunders observed. The survey shows a mix of caution and optimism within the industry. While 72% of the lenders reported that credit and underwriting standards have tightened somewhat, 70% expect to selectively grow their commercial real estate loan balances this year.
"Underwriting standards are tougher today than they were six months ago, but they are reasonable for this point in the cycle," Peter Grabell, Bridger Senior Vice President, added. Accordingly, 73% of the loan officers foresee a strong performance from their commercial real estate loan portfolios this year, the survey found, characterized by moderate delinquency and REO levels.
The complete results of the Lenders' 2002 Commercial Real Estate Perspectives Survey can be viewed at www.BridgerFunding.com.