After the high profile insolvency of lending institutions like Silicon Valley and Signature Banks, there has been a lot of talk about how much lending for commercial real estate has dried up. This has certainly been the case for office buildings, which are struggling to prove their value with historically low occupancy and high vacancy rates. But a new report by Berkadia suggests that the lending environment for multifamily properties is still healthy. “While we’re seeing caution in bank lending, the second quarter supported the idea that there wasn’t nearly as much pullback as we thought there’d be,” said report author Josh Bodin.
This report is just another example of how negative news can overshadow reality. There has been so much in the news about the “drying up” of commercial real estate lending and the “death” of the asset class as a whole that has many believing that the struggles of some markets are being felt across the board. The reality is obviously very different. Multifamily properties still have great underlying fundamentals that include population growth, limited new inventory, and a difficult path to home ownership. Loans are said to be the lifeblood of real estate, and, so far at least, the blood flow seems strong for multifamily, despite what the media tries to portray.