Strong multifamily market leading to hike in lending

The healthy and continually improving multifamily market likely played a substantial role in the recent rise in loans, according to a report by CoStar Group.

Perhaps it was only a matter of time before lending in the commercial real estate sector eased, but the healthy and continually improving multifamily market likely played a substantial role in the recent rise in loans, according to a report by CoStar Group.

The information and analytics firm indicated many CRE companies are seeing the second half of 2012 as an opportune period to secure loans for new development.

One head of a financial institution in particular noted the strong conditions currently seen in the CRE market – especially the multifamily segment -  is primary reason for the eased lending standards. However, the executive stated loans are being approved for other aspects of CRE, as well.

"We're not going into [the commercial real estate] market with just a bet that we're just doing multifamily," Kirk W. Walters, senior executive vice president and CFO of People's United Financial Inc., told CoStar. "Certainly multifamily will be in the mix, it will be one of the things we'll be doing, but we'll be doing all types of commercial real estate."

Several reports have shown other CRE segments are catching up to multifamily in terms of performance. Data from Green Street Advisors and Moody's/Real Capital Analytics indicated overall CRE prices have been increasing nationwide this year.

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