Waiting for the Construction Finance Comeback

WASHINGTON, DC-We reported this morning that SunTrust Bank provided a $112 million loan to California State Teachers’ Retirement System for Lincoln Place. JLL’s Wes Boatright, who was on the team that brokered the loan, explained why banks like SunTrust were moving away from construction financing, or at least diversifying their lending operations. His points made complete sense but we wondered: will construction finance ever return to robust health? After all, other forms of commercial real estate financing have improved, in some markets quite dramatically.

The National Association of Realtors, for example, just reported that national banks, which retreated from commercial markets in the wake of the recession, have been finding conditions favorable and re-entering the market. During 2012, national banks made up 16% of the market, a 4% increase from 2011, according to data from Real Capital Analytics. “Regional banks also added to their portfolio of commercial real estate loans, spelling good news for properties and deals in secondary and tertiary markets,” NAR said.