PSRS CEO Dan Phelan sat down with the California Mortgage Banker Association on Episode 114 of their youtube show 'CMBA Connect' where he discussed the tough market that all real estate finance is experiencing in 2022. Highlights of his conversation are below:
Rate increases have heavily impacted the market. Commercial mortgage rates have gone from the high 2s to the low 3s late last year to over 5% today.
As a company, we’ve had a great first six months and have closed almost $1 billion worth of mortgages. We think our second half will be a little slower as we see recent rate increases affecting loan volume.
Asset Classes Breakdown by Dan Phelan:
The verdict on Office is not yet in as we are unsure of what the future of office looks like with the evolving hybrid and remote work dynamic. Regular office is well-occupied and multi-tenant office space is faring better than large plate office space where whole floors are leased at a time.
Life Science is growing rapidly in San Diego, the third largest life science market behind Boston and the Bay Area.
Retail and restaurants have come back strong. Restaurants are holding onto the extra sidewalk space that was introduced during the pandemic which has been beneficial for business.
The hottest sectors are multifamily and industrial.
Multifamily continues to grow as there tends to be a lot of new projects being currently built.
I am concerned with Industrial we’ve hit a saturation point, but time will tell. A lot of industrial has been developed over the last few years and the occupancy levels are strong.
Self-storage continues to be very strong as new projects are getting built all the time and seem to fill up very quickly.
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