The New York real estate market is doing relatively well. How is New York doing compared to the country as a whole? Tom Fink illustrates by showing the nation sectioned into regions and shows the delinquency rate in each region.
From a real estate perspective, the best performing states are in the west coast region and a lot of the California market seems to be recovering nicely. The mid-Atlantic region, which encompasses NY, NJ and PA, is about middle of the pack on delinquency rates. New England continues to do well but is dominated by the Boston healthcare market. Outside of Boston, there are some challenges in the other areas. The west south central, which encompasses Texas, is “going gang busters… We have an energy rich economy today and Texas is an energy state, that’s why that area of the country is doing so well."
Aaron Kaiser: Hello, I'm Aaron Kaiser, Partner at EisnerAmper and Co-Chair of our firm's Real Estate Practice. It's my pleasure today to introduce Tom Fink, Senior Vice President and Managing Director of Trepp LLC. Trepp was founded in 1979 and is the leading provider of information analytics and technology to the commercial mortgage backed securities, commercial real estate and banking markets. Welcome. So Tom, New York by itself is doing relatively well. How is New York doing compared to the country as a whole?
Tom Fink: What we've done on this next chart here, Aaron, is we've broken the country down by regions and show you the delinquency rate in each region and as you can see, the Middle Atlantic, which encompasses New York, New Jersey and Pennsylvania, is about middle of the pack on delinquency rates.
The best performance dates from a real estate perspective are the West Coast, so you've got the big drivers of Seattle, which is high technology, and then you've got a lot of the California market, which seems to be recovering nicely. You know, New England continues to do well, but again that's also dominated by the Boston health care market. That's what's absorbing a lot of the space up there. You get out of Boston, you have some challenges and some of the other regional markets there, and of course the west, south central, which encompasses Texas is going gangbusters. I mean we have an energy rich economy today, Texas is an energy state. That's why that area in the country is doing so well.
Aaron Kaiser: Tom, thank you very much for your insights and thought leadership.
Tom Fink: Aaron, it was my pleasure. I always liked working with you and the folks at EisnerAmper.
Aaron Kaiser: Thank you so much. For more information, go to EisnerAmper.com
What role are government-sponsored organizations playing in the real estate market today? Tom Fink stresses that government-sponsored agencies are still very important factors in today’s real estate marketplace.
What is the change in the level of non-performing debt and which way is the trend going? Tom Fink discusses the delinquency severity breakdown, saying “we’ve seen a real decline in the overall level of delinquencies in the market.”
How is the New York metropolitan real estate investment market doing? Tom Fink discusses the tri-state area commercial mortgage-backed security delinquency rates. It shows that New York State is outperforming its cohorts in NJ and PA.
Would a rise in interest rates affect the coming wall of maturities? Tom Fink states that if interest rates were to go up substantially that would provide an issue for the marketplace because of the uncertainty of the volatility.
In terms of safety and risk, what trends can be seen in the different lending classes? Tom Fink thinks credit standards have loosened over the last two to three years as more money becomes available and borrowers get better terms and conditions.
After discussing New York, Tom Fink discusses markets around the world from an equity perspective and how there's an awful lot of money is still available for pursuing equity investments in real estates around the globe in terms of debt.
When asked about the important emerging technologies in the marketplace, Tom Fink replies, “I think we still have a long way to go before technology is really a factor in the commercial real estate market space. But, I think it’s still an exciting time”.
Tom Fink discusses the estimated upcoming commercial real estate debt maturities with annual maturities by lender type. The last 3 years have shown a continued erosion of the amount that’s due in 2016 and 2017 as people pre-pay loans.
The real estate industry has made a strong rebound since 2009 – it’s healthy, back on its feet and active. Rates continue to be at a historic low and there is still a huge amount of stimulus outstanding.