2024’s Lending Shift: Emerging Trends and New Players in the Market
Terrydale Capital
Mar 26, 2024 6 Min read
As we continue forward into 2024 and close a variety of deals nationwide, we have seen an emergence of various trends pertaining to investment and lending activity. In this blog, we will divulge a variety of trends that we have been seeing across the nation in the commercial real estate industry, and give pointers on what to potentially keep an eye out for as the year progresses.
Shift In Executions By Lender Type
During the tumultuous market of 2023, we at Terrydale Capital saw an overwhelming amount of loan executions being done by banks and credit unions as they were able to meet the financial goals of a variety of investors in a steady manner. However, as we have continued into 2024, we have seen a sharp change in the executions. There has been a marked shift towards executions done through alternative lending vehicles such as debt funds and private money options.
We deduce this is the case as more and more deals are presenting a demand for bridge and hard money options as they either transition from a maturity or seek quick acquisitions in the market. Given the current volume, we expect alternative lending options to remain strong as the year progresses.
Interest Rates Are Holding Steady
Despite no clear word on the future from the Fed, interest rates have been holding rather steady the last few weeks, which has given some a sigh of relief that there may be a light at the end of the tunnel. On the same note, having steady interest rates is a beneficial deal for lenders and other financing professionals as underwriting can be more expedited as they know and understand the market they are working with. Better understanding on all fronts can lead to quicker closings and more time-effective investing.
CMBS Loans Are On The Rise
While a variety of alternative financing vehicles have taken center stage in 2024, an emerging financing option, as of late, has been CMBS loans. Lenders in our network that offer CMBS options have noted that CMBS executions have risen due to more favorable terms for a variety of assets.
Loan Maturations Are Coming To A Head
At the outset of the year, loan maturations were set to eclipse 2023 as many loans that year received extensions coupled with the already set maturing loans for 2024. Prior estimates set the amount of maturations at $659 billion, but newer estimates put the number closer to $929 billion. Maturities by property types were reported as follows:
Hotel: 38%
Industrial: 27%
Healthcare: 18%
Retail: 17%
Multifamily: 12%
Demand In Affordable Housing
With still high housing prices and high rental prices edging out many people, these folks are turning more and more to affordable housing options. However, many are met with a significant lack in overall supply to meet their needs adequately. This lack of supply and surging demand has led to a renewed spike in interest in the affordable housing sector as a potential investment opportunity.
The Rise of Data Centers
As digital technology continues to rise and integrate, especially technologies such as artificial intelligence, the need for sources of data storage have developed data centers into one of the strongest up-and-coming asset types in the last couple of years. With the demand for data storage not looking to cease in the coming years, it is a great opportunity for investors seeking to diversify their assets.
Conclusion
While there still lies some inevitable uncertainty of the future of the market. There are some notable shifts and rising trends that commercial real estate investors can take advantage of now. As always, the name of the game is timing and preparation. Being prepared to execute even if financing isn’t in your immediate future, makes the entire process easier when the time does eventually come. When you need the right team beside you in your preparations to execute, contact us at Terrydale Capital today!
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Headquartered in Dallas, Texas, Terrydale Capital is a leader in commercial real estate financing. We have close relationships with the nation’s top banks, lenders & family offices allowing us to provide the most competitive financing solutions in the market.
