ABA Banking Journal - March/April 2016 - (Page 30)
> REAL ESTATE LENDING
at a Crossroads
sure and economic
estate market in 2016.
BY PHIL HAL L
aseball legend Yogi Berra famously quipped, "The
future ain't what it used to be." Commercial real
estate lenders might agree.
Although most industry experts look at the
sector's future with optimism and enthusiasm, slivers
of mild apprehension have slowly permeated the nearterm forecast. And while this doesn't significantly change
how industry leaders perceive the coming months, it
nonetheless buffers the sense of exuberance at what the
future might bring.
A warning sign of apprehension came in September
2015 when the Urban Land Institute announced that its
latest forecast was "slightly less bullish on its outlook"
compared to its April 2015 forecast. ULI leader and survey
participant William Maher, director of North American
strategy for LaSalle Investment Management in Baltimore,
blames potential potholes on foreign sources. "The U.S.
economy and real estate markets are in much better
shape than most other countries, but global economies
and capital markets are increasingly interrelated," he says.
Jason Pendergist, president of consumer and commercial
banking at Laguna Hills, Calif.-based Luther Burbank
Savings Bank, agrees with that diagnosis, although he
notes that overseas problems could be both a negative
ABA BANKING JOURNAL | MARCH/APRIL 2016
"It will be an interesting time in the real estate cycle," he
says. "My gut says that we have a number of years ahead
of us before we see the ugly side of the cycle pop up.
If there is a negative cycle event, it will be in the global
economy. But until we see the global economy return to
stable constant growth, we will continue to see an advance
of capital in commercial real estate."
The bigger picture
But that is not to say that the U.S. economy is without its
hiccups and headaches.
"Contrary to what we've been told by the mainstream
media, I don't think the economy and employment numbers
are as strong as we're being led to believe," comments
Peter Doiron, SVP at Thomaston Saving Bank, which serves
the central Connecticut market. "We are still looking at 8
percent unemployment in my market."
Michelle Lucci is a risk management consultant at Bankers
Toolbox, which ABA endorses for its Crest stress testing
program for CRE concentrations. She points out that
economic recovery is still an elusive commodity in many
markets-especially in those areas carrying the brunt of the
housing bubble implosion.
"I'm in the Tampa market and many foreclosures are
still working their way through the system," she says.
Table of Contents for the Digital Edition of ABA Banking Journal - March/April 2016
LEARNING THROUGH LITERATURE
PUMPING IT UP
CRE AT A CROSSROADS
LAYING A FOUNDATION FOR INNOVATION
A PASSION FOR ADVOCACY
WHY BANK CONSOLIDATION IN THE U.S. WILL LIFT OFF IN 2016
ABA COMPLIANCE CENTER INBOX
BOOKS FOR BANKERS
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - March/April 2016