The commercial real estate market received a needed shot in the arm from the Federal Reserve on August 17th. In a joint announcement with the U.S. Treasury, the Federal Reserve said it was extending the Term Asset-Backed Securities Loan Facility (TALF) to June 30th 2010 for commercial mortgage backed securities. The Federal Reserve and the Treasury also extended the TALF through March 31st 2010 for legacy backed commercial securities.
The move served to relieve the pressure mounting from the December 31st 2009 deadline. Commercial lenders and lawmakers have aggressively supported efforts to shore up the troubled commercial real estate markets.
The Fed and Treasury suggested that market conditions are improving but that Asset Backed Securities of consumer and business loans were still under extreme pressure. The agencies suggested the conditions would remain volatile for months to come.
Stabilizing the commercial mortgage market is a positive step for new investors. The hesitancy of lenders to accept new loan applications has slowed the demand. Now that money is on the table, investors are expected to take advantage of unusually low values.
Also encouraging is the fed’s announcement that it was considering expanding the TALF into new commercial waters. While no commitments were made, the agency said it would consider expansion of programs as economic or financial conditions warranted.
Due to employment layoffs and consumer reservations, many commercial properties are experiencing abnormally high vacancy rates. Commercial real property values have declined. New investors will now find lenders anxious to renegotiate terms and get performing loans on the books. Like the housing market, the commercial real estate market is an opportunity waiting to happen. Many commercial investors are finding federal, state and local government incentive programs that provide new buyer assistance. It is a strong buyer’s market out there. If you were ever going to get in the real estate market, the time is now.