Our office did not just remain “open for business” for 2021 but very busy. We are grateful to all our customers who have contributed to a record year of loan repayment for us. Although they were certainly challenges from time to time, we were able to provide financing for all types of real estate, multiple sources of lenders and loan sizes from small to medium to large. Although most properties are on our MSA, we have followed our clients as they expand their portfolios nationwide, working with the entire Northmarq network of 40 offices across the country.
While apartment buildings continue to shine as the majority of our funding, we remain busy with industrial and retail loans as well. Our lenders have been able to provide very competitive and favorable loan terms to our clients, who have experienced many business cycles. What is crucial for us is to have such a wide range of Life Company lenders operating in our market. We value working with these lenders, many of whom we have worked with for many decades.
Time is important to minimize instability
With the pandemic shifting to an endemic one, we hope the worst is behind us and look forward to some normalcy in 2022. All of our lenders have excellent lending targets and interest rates, although quite volatile, remain at historically low levels. Timing is important for any agreement and we are proud to be able to react quickly to minimize any instability. We remain committed to providing know-how in matters of contracting, closing and market knowledge.
The multi-family remains the favored asset category
Looking to the coming months, we will be watching the trends for many families as rents and values continue to rise. Occupancy levels remain quite high, over 95% in most markets. The supply of new units lags behind the demand, creating a frenzy to increase rents, as supply chain delays exacerbate shortages. In addition, the conversion of single-family homes into rental properties is taking on a new form of competition.
Higher real estate rates for many families are at an all-time low and trading is attracting capital from every source imaginable. Value-added trades are the most sought after with the potential for higher returns on investors. This in turn has led to increased activity from Bridge Lenders providing short-term flexible financing options such as a floating interest rate, flexible prepayment structure and interest-only payment options. This trend is likely to continue. Freddie Mac and Fannie Mae capture a business that is affordable and for their best borrowers. With volume ceilings rising for 2022, we expect a more controlled volume flow that will affect spread adjustments throughout the year.
Do not overlook other types of real estate
The retail sector has recovered somewhat as the replacement and relocation of tenants has stabilized. Location, location, location is important as always. There is a transition to services, while landlords adapt to tenant and tenant rights adjustments. This trend will continue.
Industrial property continues to explode due to the distribution needs of online shopping. Amazon and many other logistics companies are expanding across the country. In the Midwest, we benefit from the transportation networks we support, by land, sea and sky. Trains, planes and cars provide an excellent network to support industrial spaces throughout our market.
Other types of real estate, such as office, hospitality, residential construction, mixed use development and self-storage, have lender opportunities, with more specific alternatives from our network.
Rising borrowing prices, not unexpected, remain at historically low levels
We are in an amazing lending environment in recent years, with interest rates starting at 2, after 3 and now reaching 4%, with inflationary pressures and the Federal Reserve trying to dominate inflation while allowing GDP growth. Although we do not want to see interest rates rise, this was not unexpected, as the economy is strengthening and historically low interest rates are projected to rise in recent years. It will be interesting as we move forward. Today’s prices are still very desirable.
We look forward to another wonderful year providing the best financing alternatives to our customers. We proudly continue to exceed the expectations of our lenders and customers by providing the best services in the category.