Steady Growth for Commercial Real Estate Lending

Steve (here with wife Lori in Italy) expects about 10% real estate lending volume growth for his bank this year. He's uncomfortable growing much faster for fear of a bubble. The (eventual) prospect of higher interest rates is driving some of that activity, but mostly it's steady growth in the local economy. Although that makes some people pessimistic, Steve says his clients' sales, profits, hiring, and investment are doing well, pushing the demand for new space. 

Overall locally, Steve says, bank lending is up for commercial real estate, and companies are borrowing in higher amounts. You can thank increased construction, and San Diego has a lot of that on the horizon, both downtown and beyond. Recently Regents originated a $2M SBA 504 loan for purchase and upgrades to an owner-occupied San Diego-area industrial building, the kind of bread-and-butter lending that's been steadily rising. Also, life companies are changing their lending patterns, Steve says; not so long ago, they wouldn't consider anything less than $10M.

One-and-a-half acres at 2030 El Cajon Blvd has traded hands in North Park, the first large redevelopment project in North Park this cycle, Colliers International's Victor Krebs tells us. (Victor and colleague Gunder Greager brokered the deal between seller AmProp North Park LLC and buyer TR Hale LLC.) It will be catalytic for the redevelopment of this part of El Cajon Blvd, he predicts. The redevelopment of the area is being driven, in part, by young renters attracted by its mix of building styles, its retail, and entertainment—and they're willing to pay top-dollar.

Here's a pic from the Bisnow blimp. The buyer plans to develop a mixed-use project on the site, which is entitled for 180 residential units. North Park is seeing significant interest from developers looking for high-quality infill sites, especially entitled sites of this scale, Victor says. He has also handled other deals in the area, including the sale of the 225-unit La Boheme to DR Horton, the sale of the 89-unit Egyptian Condominiums to CityMark Development, and the sale of the Lafayette Hotel.