Looking Back: Commercial Lending in San Antonio fell on Rough Times in 2009

The San Antonio commercial real estate market isn’t all bad news: it’s just that banks are still being stingy when it comes to commercial loans.  In fact, most of the lending in San Antonio’s commercial sector is coming from the refinancing of existing debt; not for the construction of new projects. So, how do we break out of the cycle that left the commercial real estate market in San Antonio at a veritable stand still in 2009?

How to Break the Cycle

First of all, the lenders must begin to ease off the tough restrictions, thereby enabling builders and developers to obtain financing. Lenders must also be willing to put up a larger percentage and demand more realistic returns. Members of the 2009 Community Development Summit, which was recently hosted by the city of San Antonio and the San Antonio chapter of the Urban Land Institute at the Convention Center, also agreed that these topics were huge roadblocks for San Antonio commercial real estate development.

San Antonio still comes out Ahead

Perhaps one of the positive aspects about San Antonio is that this dynamic city was spared much of the fallout from the nationwide credit crisis and housing market collapse. From positive job growth to steady rents, the commercial real estate market in San Antonio enjoys a more robust economy than other large cities throughout the country. Today’s tough lending practices have resulted in lenders now rarely willing to put up more than 70 percent of the money needed to finance a commercial project. In contrast, lenders used to be more than willing to front as much as 90 percent for a commercial project in San Antonio.

Waiting for a Rebound

It is important to understand that the commercial real estate industry in San Antonio is poised for a rebound, as the residential real estate market is currently experiencing positive signs of growth and the commercial industry generally lags about 10 to 18 months behind. Although retailers are finding it difficult to secure financing, this sector of the economy is still seeing deals take place. However, retailers have been getting a bit more creative because of the tight lending sector. It is common, for example, to see retailers building smaller stores and retail developments being built smaller. A good example of a smaller retail development is Quarry Village, which first opened its doors in October 2008.

Posted by Richard Soto on
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