How did the Pandemic affect Commercial Lending in Florida


How do you see the landscape for commercial lending in Florida changing? How has it already changed?

Since the COVID19 pandemic, a lot has changed and is still changing for lending institutions and borrowers. The change is going to remain fluid now the coming year with an expected positive acceleration. In March-May 2020, during the beginning of COVID, we saw that many financial institutions change their approach from doing new loans to spending their time helping existing customers with their current loans as well as leading the charge on the COVID19 stimulus-response supporting the PPP loan programs. Needless to say, most companies shut down completely or slowed down lending while some, such as credit unions continued to support their local economy by remaining to do new loans, in addition to supporting current members and stimulus efforts.
The landscape in the commercial lending field will continue to transfer as it has over the last months, with borrowers and lenders focusing on purchasing and financing properties in the multifamily sector as well as some multi-unit industrial spaces. Most lenders and borrowers are carefully discovering new opportunities in the retail and restaurant sectors, as we still do not fully understand the impacts COVID19 has had on many small retailers.

Right now, mortgage rates are very low, does this remain true for commercial loans as well?

Yes, however, there are two sides to that coin. Most commercial lenders have hit their floor rates with rates between 3.90-4.25% for commercial loans, some with varying terms and rates based on the risk of the loan they are ready to take. Home mortgage rates, as most know, have been at historical lows for the past few months; however, they are about to increase as we are getting closer to the end of the year. Commercial loan rates are expected to stay the same with lending intuitions to understand the impacts of the economic recovery.

Since people are working from home what type of commercial properties are people interested in?

Many individual investors have changed their preferences towards multi-family properties as well as industrial properties with some still looking for single-tenant retail buildings in some solid industries, for instance, pharmacies and retail medical providers. Each transaction is delicately reviewed by investors and lenders to determine the stability of each investment. With low-interest rates, there are not many other investments that yield as high of returns that real estate does, so we continue to see demand in the commercial real estate sector. However, everyone is examining the possibilities with caution to ensure the right investment is selected.

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