Economists' Outlook

Housing stats and analysis from NAR's research experts.

After several years of drought, the lending spigot opened a little wider during 2012, as every lender group upped its volume. With asset valuations rising and record low interest rates, lending provided a firmer foundation for investment deals. The lending landscape became more balanced as multiple sources competed for deals - commercial banks and CMBS posted the strongest yearly growth rates, taking market share from government agencies and insurance companies.

National banks, which retreated from commercial markets in the wake of the recession, have been finding conditions favorable and re-entering the market. During 2012, national banks made up 16 percent of the market, a four percent increase from 2011, according to data from Real Capital Analytics. Regional banks also added to their portfolio of commercial real estate loans, spelling good news for properties and deals in secondary and tertiary markets.

The CMBS market regained its stride, totaling $48 billion in new issuance during 2012 and closing in on government agencies’ market share, at 22 percent. The increased level of competition among lenders became obvious, as government agencies and insurance companies - even with similar or higher commitments in 2012 as in 2011 - saw their market share diminish. The retail and hotel sectors found much interest in the CMBS market, as the government agencies maintain their dominant presence in the apartment market. Office properties were of interest to most lenders, while commercial banks were dominant in the industrial sector.

The bifurcation in capital availability along property values continued in 2012. As data from Real Capital Analytics indicates, for deals valued at $2.5 million and above, CMBS issuers and government agencies remained dominant players in secondary and tertiary markets, followed by national banks, insurance companies and regional banks.

Meanwhile, for transactions below the $2.0 million mark, private investors along with local and regional banks, continued to serve as the main conduits for capital liquidity.

According to the REALTORS 2013 Commercial Real Estate Lending Survey, the main sources of financing for small business and smaller transactions are local banks - accounting for 71.8 percent of closed sales. Regional banks and private investors were the other major sources of funding, with 48.2 percent and 39.1 percent of sales, respectively. The Small Business Administration provided funding for 35.8 percent of closed transactions. By contrast, large national banks represented only 25.8 percent of commercial deals.

For the full report of the Commercial Lending Survey, visit

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