April 3, 2023

Farhan Kabani authors perspective in Commercial Property Executive: Waiting for the thaw in CRE deal flow

Clarity may be around the corner for real estate lenders and investors

DALLAS, TEXAS (April 3, 2023) - The industry seems to have arrived at a consensus: Opportunities are available for those willing to search for them, and that search may be getting a little bit easier. The expectation is for more clarity from the Fed as the spring progresses and, accordingly, Northmarq anticipates we will see strong transaction volume from summer until the end of the year.

Retail Lending Becomes Attractive
One of the key takeaways from recent conversations generated with lenders was that nearly all of them are actively seeking retail loan opportunities. Improved indicators, such as occupancy and overall rent, have resulted in more favorable underwriting in the sector. The improved conditions are a result of limited construction in certain markets coming online in the last five years. This has made the environment more palatable for life company lenders to re-enter the space, and also allow for strong execution with commercial banks, credit unions and conduits.

Adaptive reuse has emerged as an in-demand space. Conversions to mixed-use, life-style, and fulfillment centers have resulted in maximization of a retail asset’s value and best-use. This translates to more institutional equity providers willing to assist developers in capitalizing on these opportunities. The retail sector does have its headwinds, however, with two consecutive quarters of declining activity noted in the single-tenant net lease sector, as well as a similar pull-back in multi-tenant retail.

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