U.S. commercial real estate lending is robust, according to the first-ever ABA Commercial Real Estate Survey, which was released by that organization at its Real Estate Lending Conference in San Antonio on Tuesday. Fully eight in 10 banks surveyed say they plan to increase concentrations in CRE in 2016.
Currently, 19 percent of the surveyed banks had construction concentrations of more than 100 percent, while 9 percent had 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 came 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 burden, low capitalization rates, increasing interest rates, as well as economic and market conditions.
The ABA survey involved the participation of 136 banks, with data collected from early February to late March, and in most cases reporting calendar year or year-end results. Of the survey 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.