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Portland commercial lenders on threats to the robust real estate market (Infographic)

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  • August 8, 2018
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Commercial loan volume in Oregon and Southwest Washington looks to have bucked the trend in 2017.

The 19 banks, credit unions and other lenders that responded to our survey for The List reported $15.3 billion in commercial loans as of the end of last year, an increase of more than $2 billion, or 15.2 percent. While that only represented 4.6 percent of their global volume, the same lenders experienced a 4.9 percent dip in global loan volume in 2017.

Within the region, lenders continued to support real estate projects which accounted for 62 percent of the sectors to which they estimated lending, the same share as last year. But office properties accounted for a much larger portion of their loans at the expense of mixed-use and multi-family properties. Lending to manufacturers and leisure and hospitality businesses also increased this year, while retailers and construction firms saw a little less activity.

On the interest rate front, a growing number, 64 percent, of local lenders expect rates to be ‘moderately higher’ in the next six months, though 45 percent think they’ll be ‘about the same.’

Lenders noted a variety of potential challenges going forward. The low-interest and high-value commercial real estate environment presents future operational risks for both borrowers and lenders explained Rick Brooke, executive vice president of Q10 | National Mortgage Co. (No. 12 on The List). "For many high-leverage loans underwritten with strong occupancy and high rents that the market presently enjoys, there is a risk that loans whose principal reduction is limited over the next 10-year cycle could be challenged if interest rates rise and rents and even occupancy levels aren’t able to offset a potential of increased cost of debt."

On the investment side, Ken Griggs, president of Norris Beggs & Simpson Financial Services (No. 3) saw near-term trouble in "finding enough product for all the capital available." He wrote, "We address this through aggressive marketing across all sources of real estate and borrower types."

And in memory of the last recession, "competitors’ risky and low-yield lending," might bring about a "market correction," wrote Thomas Wiley, M&T Bank’s (No.5) group vice president.

Largest Commercial Lending Firms in Oregon & S.W. Washington

Ranked by Dollar volume of commercial loans held in Oregon & Clark County, Washington as of December 31, 2017

Rank Name Dollar volume of commercial loans held in Oregon & Clark County, Washington as of December 31, 2017 1 U.S. Bank $3.89 billion 2 Columbia Bank $2.85 billion 3 Norris Beggs & Simpson Financial Services $2.75 billion View This List

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