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While COVID-19 has affected nearly every aspect of commercial real estate in one way or another, one of the most fundamental consequences has been in lending, where strategies are being adjusted for a post-pandemic environment. Many lenders are facing substantial headwinds and as a result, underwriting criteria has become more conservative, according to a recent report by Marcus & Millichap.

This conservative stance has resulted in fewer options for some borrowers. While liquidity has remained ample, loan to-value ratios contracted as the health crisis unfolded, now resting in the 50 to 70% range, depending on the deal and borrower. Debt service coverage ratios have also shifted, rising to the 1.6 to 1.9% range. In some cases, more weight is placed on the strength and experience of the borrower than the asset itself.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.

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