SAN DIEGO—The cost of debt is so low that it's more expensive not to leverage deals on commercial real estate properties now than it is to incur debt on them, Steve Powel, president and CEO of New York-based Situs, tells GlobeSt.com exclusively. We caught up with Powel after CREF15 here last week to get his take on the conference and what he sees happening in the CRE financial markets.

GlobeSt.com: What were the main takeaways for you from CREF15?

Powel: There are clearly more shops in the CMBS space today than there used to be, but the total number of people in the industry isn't any more than before. There are actually fewer people because firms have become more efficient and leaner. In the past, you'd have 10 or so groups running around with $5 billion to $30 billion on their balance sheet, and none of them are doing that now. There are a lot of other players in the space, and the commitment to this space is so much smaller than it was five to seven years ago. There's a lot of competition for deals, but we're only doing 40% of the deals we were doing in '07. People are beating each other up for the same small deals, but when it comes to larger deals, nobody can take that down with their balance sheet. You have to get three to four banks in it in a lot of situations. a $1-billion deal takes a lot more cooperation amongst different lenders than it did five to seven years ago from the conduit perspective.

From the balance-sheet perspective, clearly there are more people in that space. A lot of these shops are just lighting up. For most of those people, they're all in anticipation of the refi wave coming in front of us.

GlobeSt.com: How do you view the financing market for commercial real estate now as compared to a year ago?

Powel: I met with some investors this morning who say they have properties with no leverage on them---they don't know what to do. Where should they go with it? I say you're costing yourself money by not putting debt on deals today. I don't think terms will get any better. If you've got a relatively stable property, lock it down with debt. As a borrower, there are enough options to meet your objectives. There's mezzanine and construction financing available today in more places than there were two or three years ago.

GlobeSt.com: What do you think will be the strongest property types for lending in the coming year?

Powel: What I see is a lot more mixed-use projects being done. In retail, you're not getting the power centers—they're not being built anymore. There's specialty stuff here and there. In the last year or 18 months, office, retail and multifamily housing combinations are most of the new stuff getting done. There's not straight-up condo or this or that. We're seeing this more in the South, but also around the country.

GlobeSt.com: What new geographical sectors are emerging as targets for CRE lending?

Powel: Clearly, South Florida is going gangbusters, and Texas has been as well, although people are very concerned about Texas because of the price of oil. I think the oil issues are very short-term in nature, but Texas is causing some people concern these days. In the upper Midwest, where shale production is going on, people are concerned as well, and they're lending there is quite responsible. At the cost of what they're pulling oil out of, they can still do it at a profit. Houston and Texas in general are more of a geopolitical question as far as the Ukraine and Russia—what is the price of oil doing to them?