Community banks across the United States issued a record number of commercial real estate loans in the first half of 2021.
MountainSeed Analytics Commercial Real Estate Index (CRE) data indicate a sharp increase in such loans in the first half of the year compared to the same period in 2020.
The index, based on a survey of commercial real estate trends across hundreds of financial institutions in the community, found growth to eclipse 2020 by 39% and surpass pre-2019 by 30%.
“These numbers show that local and regional banks and credit unions remain competitive and optimistic about CRE in the post-Covid environment.” said Karl Streck, chief executive officer of MountainSeed.
“Because local lenders are close to assets and their local markets, they can move faster and be more competitive than much larger lenders – and the numbers show that.”
Meanwhile, according to forecasts, the issuance of loans for retail and office services will decrease slightly compared to the same period last year. Hotel lending is expected to grow 100% after a pandemic low.
According to the data, lenders are now confident in the tourism and travel sector after being hit hard by the pandemic. However, doubts about office and retail space remain as employees continue to work from home and online purchases affect future retail leases.
Smaller banks have been invading the CRE sector for several years after the 2007-09 global financial crisis. Restrictions imposed on large investment banks after the crisis limited their lending options and opened up the market for alternative lenders such as asset managers and smaller banks.