The Commercial Realty Market in the Face of D.C. Uncertainty
Amidst the dog days of Summer, the stock market sits at record highs, the FED continues to promise higher interest rates and US politics remain in gridlock. Little has changed, nothing seems possible, i.e. tax reform or healthcare with evermore tension in world hotspots Syria and North Korea. All of this with the GOP in majority but not in control due to no apparent leadership. Ronald Reagan we miss you dearly. The benchmark commercial lending rate; (10 year U.S. Treasury rate) has stabilized in the 2.25% range (approximately 50 basis points higher than the week before the presidential election and 75 basis points higher than this time last year).
Austin’s 3.3 % unemployment rate reflects a growing regional economy in Central Texas with approximately 30,000 new jobs over the past 12 months. New employers Merck and Oracle will soon add over 1,000 high paying jobs in medical research and technology in the CBD. The May ’17 opening of the new Dell Medical School and Medical Center downtown will attract world class doctors, students and researchers for decades to come. Expansions by Google and Apple continue to grow their employment rolls and with it their occupancy within Austin commercial real estate.
Commercial real estate mortgage rates today are generally 150-180 basis points over the Treasury rate; resulting in fixed interest rates at 3.75% -to-4.00% on a non-recourse basis for 10 years. Permanent loans are widely available for acquisitions, cash-out, or refinance floating rate bank debt in order to lock-in your cost of capital before this low rate era ends. Loan terms are for 5 to 20+ years, and LTV ratios remain conservative in the 65-70% range with amortization of 25 to 30 years.
The Austin market now exceeds the target size, and continues to outperform almost every other market in all the fundamental criteria required to attract national and global investors and lenders. Austin’s diverse job base, growing economy, Texas’ tax policy and central time zone helps rank us as a Top 3 market. Texas Realty Capital’s lending resources continue to remain bullish in all Central Texas market segments.
Please call Texas Realty Capital (512-450-6800) to discuss your financing needs on any commercial real estate project. We will be happy to size up refinancing your project or a pending acquisition and provide you with an array of best in class financing options. Learn more at www.trcaustin.com.