Volatility in the Debt Market: What Does This Mean for Commercial Real Estate?

The recent election has had a big affect on the economy.  More specifically, there is currently a lot of uncertainty to the commercial real estate banking world. There are a number of regulatory issues staring lenders in the face. CMBS bankers were juggling with how to deal with new risk retention rules which resulted in some lenders pulling back lending altogether while others became more conservative. On the commercial banking front many lenders are dealing with increased regulations which have increased internal risk and review overhead. The increase in cost has resulted in a number of lenders getting less aggressive on new relationships specifically offering lower leverage and increased rates.

With the election being so new, it is hard to have much clarity with the current situation. Interest rates have widened in the last week, but this may be a little exaggerated. We are hoping to have more detail in the coming 30-60 days. Typically a republican led administration would provide some assurance on policy, but right now we are unsure how the new administration will affect free trade, globalization and fed policy. This is resulting in an increase in bond yields which, in the short term is negatively affected.  As we gain more understanding in the coming days, we will see rates begin to tighten which will allow us to paint a better picture of what is to come.

Due to this uncertainty in the market right now, it is more important than ever to have a trusted advisor. Being an expert in the self storage industry, we at SkyView Advisors look to help our clients navigate the current market place. We are the only firm with a national platform that is focused solely on self storage which makes us experts in this space. Our unique team based approach allows us to service our clients with no internal competition so you can be confident that we are working with your best interest in mind.

This article was written for the SkyView Advisors website and was also published on the List Self Storage website.