SAN FRANCISCO--(BUSINESS WIRE)--Newmark™, the largest independent commercial mortgage banking firm in the western U.S., closed $731 million of commercial mortgages across 103 unique transactions in 2Q2017. This brings the company’s overall production to more than $1.25 billion in the first half of 2017. Active property types during the second quarter include industrial, retail and self storage assets; with the company’s Phoenix, AZ, San Francisco, CA and Southern, CA production offices showing the highest transaction volumes during the period.
“As some spreads contract to offset the minor increases in treasury rates, overall cost of commercial debt remains historically low for the best assets,” said Michael Heagerty, Principal and CFO with Newmark. “While many lenders assumed their commercial mortgage allocations would be met after an active first half, additional capital has become available for the second half of the year although not for every asset class. Notably, as rent growth begins to stall in many of the major markets, multifamily assets are finding it more difficult to underwrite to prior prime rates. Retail as an asset class faces the greatest economic challenges as changing consumer behaviors affect performance and challenge underwriting. That being said, retail was still a surprisingly active asset class for production in 2Q2017.”
Heagerty pointed to the following trends as worthy of consideration at the close of 2Q2017:
- Volume – Commercial mortgage finance demand remains healthy and consistent with Newmark’s predictions for 2017 quarterly production. Newmark expects to exceed $2 billion in annual production in 2017 for its sixth year in a row.
- Credit Unions – As banks begin to pullback their allocations into the second half of 2017, credit unions are now emerging as a replacement source for commercial mortgage production.
- Bridge Loans – While an ample number of bridge lenders remain active moving into 3Q2017, it is hard to tell how many will survive into 2018.
- Retail – The most challenged asset class in today’s market is finding its stride as lenders familiar with the asset class remain confident in funding properties appropriately underwritten.
- Industrial – Constrained development, historically low vacancy rates and tenant demand in key Western markets has established strong fundamentals for this asset class. This is creating strong demand for long-term stabilization, short term repositioning and development financing.
- Self Storage – Appetite for allocations into this specialized property type remain healthy with Newmark’s correspondent lenders experienced with underwriting this asset class.
- CMBS – The wave of maturities have mainly processed through the system; all that’s left in this category are the more challenging properties. Rates are decent, but production remains low. CMBS financing, however, remains a viable alternative for challenged assets.
Newmark, a privately held company based in San Francisco, is a full service mortgage banking firm with an extensive lineup of correspondent lenders utilizing Newmark’s production, closing and servicing capabilities. Established in 1991, Newmark is currently staffed by over 70 employees in regional offices throughout the western United States. The company’s national servicing platform of nearly $10 billion represents over 1,200 loans located in 40 states. Newmark is rated as a Primary Servicer by Standard & Poor’s and is one of a select few non-banking/non-insurance chartered companies with this designation. For more information please visit www.newmarkrealtycapital.com.
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