Smaller Banks Are Shying Away from Commercial Real Estate Loans

 Posted on December 00, 0000 in Commercial Real Estate

The development of commercial real estate can be highly beneficial for the economic growth of Illinois. Unfortunately, the increased scrutiny on loans may be creating challenges for those searching for project funding. This is especially true when it comes to smaller financial institutions. Why is this happening, and what can be done about it? The following information explains further.

Small Banks and Commercial Real Estate

After the recession and the bank bailouts, regulators started cracking down on financial institutions. Warned about their generally lax lending standards and willingness to approve funding on deals that are considered especially risky – such as construction and redevelopment projects, which do not immediately generate income – small banks started to shy away from development and commercial real estate projects. Some have even resorted to selling off some of their loans to get out from underneath the microscopes of regulators. Unfortunately, that has limited the options for land developers and other commercial real estate buyers.

Other Challenges Developers and Investors Are Facing

If lending were the only issue that investors and developers were facing, the concern over a slowed economic growth throughout Illinois might not be quite as strong. Unfortunately, there are a battery of other potential hurdles for investors and developers to deal with. For example, even when not planning on developing real estate, and instead purchasing an already existing building, investors must ensure that zoning laws will not prevent them from using the building for the purpose they have intended. If that same building also needs renovations, their out-of-pocket expenses go up, as do their concerns over whether zoning laws will prohibit them from making the necessary updates.

Overcoming the Obstacles in Commercial Real Estate

There is no one way to invest or develop in commercial real estate, but there are several laws and regulations that must be adhered to. Further, investors and developers must perform due diligence on any existing property, land, or building they wish to purchase. A seasoned commercial real estate lawyer can help with such matters, as well as other obstacles that may arise along the way.

At Lindell & Tessitore, P.C., we protect the interests of our clients. Dedicated and experienced, we have the knowledge needed to help you effectively navigate through the complex hurdles of commercial real estate purchases. Learn more about how we can assist with your sale, purchase, or development project. Call 630-778-3818 and schedule a consultation with our Naperville commercial real estate attorneys today.

Source:

http://www.nytimes.com/2016/10/04/business/dealbook/scrutiny-of-commercial-real-estate-loans-chills-small-lenders.html