Hollywood – April 21st, 2014

As we move past the first quarter of 2014 we wanted to share some interesting news about the latest commercial real estate market trends. We hope you enjoy the content featured below and look forward to sending more newsletters in the coming weeks.

Commercial real estate lending on the rise

The strength of the commercial real estate market in 2014 is receiving a welcome boost from positive lender response. The Mortgage Bankers Association (MBA) projects that mortgages for multifamily and commercial projects will increase 7 percent this year to $300 billion. The organization points to low interest rates, improving property prices and increased property values as factors that will impact lending growth.

Another MBA report, released in April 2014, showed a 22 percent year-over-year increase in multifamily loans from 2012 to 2013, which totaled $136.9 billion. Office properties rang in at $70.7 billion, which was an increase of 50 percent over the previous year.

In its most recent commercial real estate lender survey summary, shared with subscribers in late March, the Real Estate Lenders Association reported that 45 percent of lenders anticipate overall growth in commercial mortgages this year. The industrial sector will likely receive the biggest boost from lenders, with 51 percent reporting an expected increase in loans for that sector, followed by retail (49 percent), office (47 percent) and multi-family (45 percent).

REIT.com, a website for the National Association of Real Estate Investment Trusts, reports that “After three years of momentum building in commercial property lending, analysts are projecting that institutional lenders will place what could berecord amounts of capital into commercial real estate in 2014.”

Quoting Jones Lang LaSalle experts, REIT.com reported “fundamentally strong” commercial property lending and improvement in real estate fundamentals, including improved consumer outlook and growth in housing markets.

Gains in the office market

In a report from Cassidy Turley, approximately 70 percent of U.S. office markets posted increased occupancy rates in the first quarter of 2014, spurred by business growth and other factors.

That news comes on the heels of the U.S. office market posting its lowest vacancy rate since 2009 in the last quarter of 2013, according to a CBRE report – a bump that correlated with job growth that quarter. A report by the Urban Land Institute and EY forecasts continued employment growth over the next three years for a total of 7.5 million new jobs nationwide, which should help support a healthy office market.

The first quarter of 2014 continued that trend as the vacancy rate dropped an additional fraction of a percentage point to 14.8 percent, and CBRE forecasts that number will fall to 14.3 percent by the end of the year.

Lower office vacancy rates are further bolstered by increases in rent of 2.1 percent, which equals an average $22.30 per square foot. Real estate experts, according to the Real Estate Consensus Forecast, expect rents to continue to rise this year and into the coming years (3 percent in 2014, 3.9 percent in 2015 and 3.6 percent in 2016).

The office market news looks promising on the local front as well with markets in the Southeast posting strong numbers. Leasing activity in Atlanta, for example, increased 11.3 percent over the same quarter last year, and the metropolitan area experienced its best absorption rates since the third quarter of 2012.

Research from Jones Lang Lasalle shows that several southeastern markets are contributing to office occupancy growth, including Houston (No. 1), Atlanta (No. 2) and Tampa Bay (No. 19) – see slide 11 of the JLL report for details.

Thanks for reading and have a great April!

PointOne Holdings