Commercial real estate lending trends shifted drastically in New York City this year, in what could be a temporary blip – or could signal changes in CRE financing far beyond the Big Apple.
CrediFi’s NYC Lending Spotlight for Q1, released this week, found that national banks no longer constitute the biggest lender category in the city and are now ranking near the bottom of the pile.
That change is tied to broader national issues regarding two seemingly contradictory ways in which government regulatory practices can affect commercial real estate finance.
Read the full NYC Lending Spotlight for Q1 2018.
On one end of the spectrum, New York Community Bank’s anticipation of the Dodd-Frank rollback helped make it the No. 1 CRE lender in New York City in the first quarter.
NYCB has explicitly tied its loan growth and balance-sheet growth to its expectations that the SIFI threshold would be raised, as happened in May.
In this sense, NYCB serves as a model for how the Dodd-Frank rollback could be a boon for commercial real estate lending and for how other regional banks may seek to grow as well, now that they have more room to do so without triggering a SIFI designation.
On the other end of the regulatory spectrum, the Federal Reserve’s unprecedented decision in February to restrict Wells Fargo’s growth following a wave of misconduct scandals and investigations may have played a role in the steep decline we found in Wells Fargo’s CRE lending in New York City in Q1.
After two years as one of the leading CRE lenders in New York City, Wells Fargo was not even among the top 20 CRE loan originators there in Q1. At the same time, CRE origination by other national banks in New York City also declined, while insurance lending went up, combining to make national banks a low-performing originator segment in the quarter. (Read about which originators picked up the slack.)
We’ll be keeping an eye on final data from Q2 to monitor whether the change in NYC lending patterns is continuing to take root and whether the impact that regulatory practices seem to be having on New York City can be seen in other markets as well.
To download the full NYC Lending Spotlight for Q1 2018, click here.