ABA Banking Journal - March/April 2016 - (Page 30)

FEATURE > REAL ESTATE LENDING CRE at a Crossroads sure and economic es pr y or lat gu re , ion tit pe m co How robust estate market in 2016. al re l cia er m m co e th ing ap sh fundamentals are 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 and positive. 30 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

CHAIRMAN’S VIEW
UPFRONT
PICTURE THIS
LEGAL BRIEFS
LEARNING THROUGH LITERATURE
PUMPING IT UP
CRE AT A CROSSROADS
LAYING A FOUNDATION FOR INNOVATION
A PASSION FOR ADVOCACY
MARKETING
CEO ROUNDTABLE
WHY BANK CONSOLIDATION IN THE U.S. WILL LIFT OFF IN 2016
ABA COMPLIANCE CENTER INBOX
PAYMENTS
CYBERSECURITY
FRAUD
BOOKS FOR BANKERS
BOARD MATTERS
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - March/April 2016