MIAMI—What challenges remain for commercial real estate owners and developers? What about creative financing? What should we expect in 2015?
Those are among the questions we asked Tim O'Connor, senior executive vice president and regional manager for NorthMarq Capital, will be sharing his insights at RealShare Central Florida in less than two weeks, in part two of this exclusive interview. You can still read part one: Is Multifamily Really Orlando's Darling?
GlobeSt.com: What challenges remain for commercial real estate owners and developers looking for capital for assets in that region?
O'Connor: There is some concern over the amount of absorption the region can handle. This is especially true for apartments downtown as we have seen so many new projects go up with rents at the higher end of the market. At some point, new projects may be temporarily delayed to see how well the market absorbs the new supply.
We are seeing a mixed bag with regard to office assets. While the professional labor force data seems to be improving, there are definitely challenges as it relates to the continual structural changes taking place in that sector. Finally, with all asset types, investors are more closely examining their exit strategies in light of possible rate increases and cap rate movements that are likely in years ahead.
GlobeSt.com: Are you seeing much in terms of creative financing in the region?
O'Connor: Mirroring what is happening throughout the nation, more and more bridge lenders have entered the market driving down the cost of capital in that sector. Construction loans have become easier to come by at higher leverage points, and lenders are more willing to consider construction-mezz financing.
GlobeSt.com: What do you expect in 2015 from a capital markets perspective?
O'Connor: Next year will be a major test on how markets will react to the Federal Reserve's likely raising of short-term rates. Next year we will also see a large wave of maturing CMBS debt that was originated in the last market peak.
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