Commercial real estate developers in California understand that financing is a key component of their business. Changes in the financing market can significantly impact prospects for new projects. Over the past year, the financing market has been strengthened by factors like low interest rates, rising real estate values and increased activity in the commercial real estate market.
A report that was published by the Mortgage Bankers Association showed that commercial real estate loans originated in 2016 exceeded $500 billion. Many analysts are predicting that the robust financing market is going to continue into 2017. Though the Federal Reserve is expected to raise interest rates somewhat this year, the increase is not likely to be so significant that it hinders lending activities. About $395 billion worth of maturing loans could lead to a rise in refinancing activity in 2017.
Others factors that could impact the financing market this year are lender competition and the availability of capital. Analysts expect that the financing market will be strengthened by increased competition among lenders due to looser lending regulations imposed by the new presidential administration. Low unemployment rates are also expected to have a positive impact on the financing market this year.
Coordinating financing sources for a large commercial real estate project can be a complicated process for some developers. A commercial real estate attorney can often be of assistance by reviewing the term sheets submitted by prospective participants and identifying any potential issues that could cause problems in the future. The attorney could also suggest less-traditional sources of financing such as crowdfunding for developers that are just starting out.