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Looking for a construction loan? Better pay attention to these trends

Friday, May 27, 2016

With all the buzz surrounding construction loans, HFF has put together a brief overview summarizing trends we are seeing in the market. The bullet points below are designed to provide some clarity into the current construction loan market. 

  • Across the country, we are seeing that banks are generally being less aggressive when it comes to construction loans. For loans that are $25 million and above, regional banks are more aggressive; however, the current trend is that all banks are taking longer to arrange construction loans.
  • Construction Loan Market Trends Bank Loaning
  • Smaller regional developers that sign recourse are still able to get 70 percent +/- for pre-leased retail, office and industrial.
  • Debt Funds will do construction loans but need size and want spreads north of 400 bps. Most have all-in rates over five percent and some as high as seven percent.

  • Construction Loan Market Trends Average Spread from 2015 to 2016
  • Construction loans are getting more difficult for everyone and not just pristine borrowers. Thus the level of inquiries for HFF’s expertise in placing construction loans may increase.

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