Community banks across the US issued a record amount of commercial real estate loans in the first half of 2021.
Data from MountainSeed Analytics’ commercial real estate (CRE) data index indicates a dramatic increase in such loans in the first half of the year compared to the same period in 2020.
The index – which is compiled from a survey of commercial real estate trends across hundreds of community financial institutions – found that the pace should eclipse 2020 by 39% and top 2019’s pre-Covid numbers by 30%.
“These numbers show that community and regional banks and credit unions remain competitive and optimistic about CRE in a post-Covid environment,” said Carl Streck, MountainSeed’s chief executive officer.
“Because community lenders are close to the assets and their local markets, they can move faster and be more competitive than much larger lenders – and the numbers show it.”
Meanwhile, retail and office loan originations are projected to be slightly down year-over-year. Hospitality lending is expected to increase by 100% following its pandemic lows.
According to the data, lenders are now confident in the tourism and travel sector after it was severely affected by the pandemic. However, hesitancy around office and retail space remains as employees continue to work from home and online shopping affects future retail leases.
Smaller banks have been making inroads into the CRE sector for several years following the global financial crisis of 2007-09. Restrictions placed on major investment banks in the wake of the crisis restricted their lending capacity and opened up the market for alternative lenders such as asset managers and smaller banks.