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Financing commercial real estate may be getting more difficult


Businesses and investors alike often find themselves in the commercial real estate market. For businesses in South Florida, the commercial property will be used as retail locations, office buildings and warehouses, among other uses. Expanding companies need space for their staff and inventory, as well as a place to sell their goods and services. Investors, on the other hand, usually buy commercial real estate in order to turn around and sell it off for a profit. They might keep their eye on an area with growth potential for years, hanging on to a piece of property in order to sell it at just the right time to maximize profits. But, for companies and investors, making a purchase of commercial real estate may be getting more difficult.

Just like financing for residential real estate, financing for commercial real estate can be a complicated process. In both instances the potential borrowers must furnish the lender with the information that shows that the borrower will repay the loan on time and in full. For commercial real estate, however, lenders are implementing more stringent standards for borrowers.

In South Florida, in particular, the real estate market has been hot for the last several years. More so in the residential realm, but the commercial real estate market has been healthier in South Florida than it has been in other parts of the country. But, readers who are familiar with previous posts here know that things may be starting to slow down in the local market.

Companies and investors in South Florida who are looking to jump into the commercial real estate market need to be prepared. Getting the right information about the local market and the requirements for getting financing are big parts of the making the right move in commercial real estate.

Source: constructiondive.com, "Banks making commercial real estate loans more difficult to secure," Kim Slowey, Nov. 8, 2016

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