In January, the Federal Reserve talked of weakness in the US commercial real estate lending sector.
It noted in its Senior Loan Officer Survey that “a significant net fraction of banks reported weaker demand for construction and land development loans, and a modest net share reported weaker demand for multifamily loans.”
Despite that, Canadian banking group Toronto Dominion’s US-based TD Bank has reported a strong rise in commercial real estate lending for its 2018 fiscal year.
The lender saw a 6.8% rise, issuing a total of $6.6 billion in new loans and renewals, bucking a trend identified by the Federal Reserve which said in its January Senior Loan Officer Survey that
Despite TD’s gains, it still faces challenges but also thinks it knows what it has to do to mitigate them.
"Changing market trends, including global and political uncertainty, are expected to have a significant impact on the real estate and business communities going forward," said Gregg Gerken, Head of Commercial Real Estate for TD Bank. "We're still seeing an increase in demand and more building of industrial space and affordable housing, but retail and office is changing. Our ability to be a strategic resource for our clients throughout the economic cycle will be key to our success."
The demand for affordable housing is a key element that TD Bank is focusing on.
The lender’s Commercial Real Estate business extended over $1 billion in community development financing to projects that included affordable housing developments in local communities in the form of debt and equity.
"In 2019, there will continue to be a growing need for affordable housing across the country," said Andrew Warren, Senior Vice President, Commercial Real Estate for TD Bank. "The number of households needing affordable housing has grown and the supply has not kept pace. In the years ahead, the industry will need to pursue different financing strategies to find a solution."