Bernanke: CRE lending ‘strained,’ loan quality ‘weak’

Improvements are needed in the commercial real estate lending market, according to Federal Reserve Chairman Ben Bernanke, who cited poor fundamentals across the board for the sector.

Improvements are needed in the commercial real estate lending market, according to Federal Reserve Chairman Ben Bernanke, who cited poor fundamentals across the board for the sector.

Speaking at the 48th Annual Conference on Bank Structure and Competition in Chicago on May 10, Bernanke stated various areas of concern remain roadblocks to a better lending market in CRE.

"Financing conditions in the commercial real estate sector also remain strained as fundamentals, including high vacancy rates, depressed property prices, and the poor quality of existing loans, continue to be weak," he said.

However, Bernanke did note that lending restrictions for CRE have eased this year. He cited data from the Fed's most recent quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices, which shows the first net easing in lending standards for CRE since 2005.

A report by the National Association of Realtors indicates CRE lending was tight in 2011, particularly for small businesses.

However, commercial real estate companies may see increased opportunities to secure loans as the year progresses if banks and lenders continue to ease their restrictions.

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