“We’re definitely seeing an increase overall in deal volume, lenders’ willingness to lend,” he said. “There are new kids on the block, meaning new banks, new lenders, whether it’s a mix of savings banks, credit unions and life companies, or debt funds that took significant market share in the last few years and continue to do so, as banks clean up their balance sheets.”
Vacancy adds to the squeeze
That rate reset, Muller said, is landing hardest on properties also absorbing new competition in their local market.
“There’s a lot of new product that was delivered to market, and the market didn’t fill up all those units yet,” he said. “So there’s higher vacancy. What typically happens is that B and C class properties suffer right away. Rents come down, there’s concessions.”
Rising costs elsewhere in a property’s operating budget are compounding that pressure at the same time, according to Muller.
“That, coupled with increased expenses overall due to increases in energy costs and other overall expenses, is creating some concerns for borrowers,” he said.
