The nation's housing markets may be slowing, but commercial real-estate development is powering into 2006 with enough momentum for another strong year, an industry economist said Monday in Orlando.
"We're looking for a pretty good year, at least as good as last year and
possibly better," said Doug Duncan, chief economist of the Mortgage Bankers
Association of America.
Speaking at the trade group's commercial real-estate finance convention at
Walt Disney World, Duncan noted that the money to fuel commercial markets is
still readily available.
"There's no evidence of capital drying up," the economist said, adding that
foreign investment is at an all-time high. Money globally looks for the
safest place to get the best return, and that happens to be the United
States, Duncan said.
With the U.S. economy growing -- Duncan sees a gradual slowing over the
course of the year but still-healthy levels by year's end -- loan
delinquencies are at historically low levels.
That will be a comfort to lenders as they consider hundreds of millions of
dollars in new loans.
Lending increased in all commercial sectors last year, with office
development leading the way, followed by apartments, retail and hotels.
Kieran P. Quinn, vice chairman of the trade association and chief executive
officer of Column Financial, a subsidiary of Credit Suisse, said the recent
extension of federally backed terrorism insurance gave commercial real
estate a boost.
Prior to the initial terrorism-insurance law in 2002, commercial property
loans were at a standstill after the Sept. 11, 2001, terrorist attacks, with
insurers reluctant to cover properties.
The law's two-year extension also raises the threshold for federal
involvement from $5 million to $50 million this year and to $100 million
Quinn said mortgage bankers would like to see the federal
terrorism-insurance program made permanent. The group also would like to see
coverage added for nuclear and biological attacks, which are now excluded.
The Orlando conference has drawn key players from throughout the commercial
real-estate business, from lenders to consultants and service providers.
Those in attendance include J.P. Morgan, Merrill Lynch Commercial Real
Estate, Prudential Financial, Morgan Stanley, CIBC World Markets and