Looking for a construction loan? Better pay attention to these trends
Friday, May 27, 2016
With all the buzz surrounding construction loans, HFF has put together a brief overview summarizing trends we are seeing in the market. The bullet points below are designed to provide some clarity into the current construction loan market.
Across the country, we are seeing that banks are generally being less aggressive when it comes to construction loans. For loans that are $25 million and above, regional banks are more aggressive; however, the current trend is that all banks are taking longer to arrange construction loans.
Smaller regional developers that sign recourse are still able to get 70 percent +/- for pre-leased retail, office and industrial.
Debt Funds will do construction loans but need size and want spreads north of 400 bps. Most have all-in rates over five percent and some as high as seven percent.
Construction loans are getting more difficult for everyone and not just pristine borrowers. Thus the level of inquiries for HFF’s expertise in placing construction loans may increase.