More financing becoming available for commercial developments

Financing is increasing for commercial real estate developments.

With the multifamily market improving, more commercial property companies may find it easier to get financing, as lenders are becoming more confident in the market, according to a report from Neil Freeman from Aries Capital.

Financial institutions are increasing construction loans, while interest rates are close to 3 percent. In addition, insurance companies are insuring debt at higher volumes than before, Freeman noted. Government-sponsored enterprises Freddie Mac and Fannie Mae have mortgage rates hovering close to 4 percent, and this is being followed by many insurers.

More new apartment properties are being built, and the consistent low vacancies due to consumers being unable to qualify for a loan is helping, he noted. This has helped rentals increase significantly, which has made the market more attractive, overall.

Major cities such as Los Angeles, New York and Washington, D.C. have witnessed a large improvement in multifamily sales activity, Freeman added.

This improvement is a stark contrast from the recession, when construction numbers reached the lowest points in history. However, new construction is high-end and encouraging high rental costs.

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