WASHINGTON, D.C. (December 10, 2020) – Commercial and multifamily mortgage performance remains mixed, revealing the various impacts the COVID-19 pandemic has had on different types of commercial real estate, according to two reports released today by the Mortgage Bankers Association (MBA). The summary of findings come from MBA’s November Commercial Real Estate Finance (CREF) Loan Performance Survey and the latest quarterly Commercial/Multifamily Delinquency Report for the third quarter of 2020. The CREF Loan Performance Survey was developed to better understand the ways the pandemic is impacting commercial mortgage loan performance. MBA’s regular quarterly analysis of commercial/multifamily delinquency rates is based on third-party numbers covering each of the major capital sources. “Commercial and multifamily mortgage delinquency rates remain mixed, varying dramatically by property type, and therefore by capital source,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Much of the stress in the market is driven by loans, predominantly for lodging and retail properties, that became delinquent in April and May and have now transitioned to later-stage delinquencies. November did see small increases in newly delinquent retail, lodging and office loans, but at levels far below what was seen at the outset of the pandemic.” Added Woodwell, “Different capital sources calculate delinquency rates in different ways, and those differences can cloud comparisons. Looking to 2021, widespread vaccinations should help the economy and commercial real estate – especially the hard-hit retail and leisure and hospitality sectors – start to recover at a faster pace by mid-summer. Between now and then, much will depend on how long the current surge lasts, and the degree to which it holds back economic activity.” Click to read more at www.mba.org.

Heading into 2020, forecasts for the Texas construction industry called for continued expansion, boosted by the state’s strong job market and continued growth. As we wrap up the year that was, we’re reflecting on the pandemic’s impact by talking to experts from Dodge Data & Analytics and Cumming. “In the early days and weeks of the crisis, many parts of the country shuttered construction activity putting people out of work,” said Dodge’s chief economist, Richard Branch. “As the economy has reopened, construction activity has recovered somewhat, but the impact of the still very weak economy has meant the delaying and canceling of planned projects.” Experts expect the rebound will not be as lengthy as it was following the 2008 recession. While it took 10 years for construction volume levels to bounce back after that, they predict volume will return to 2019 levels in three to four years. “Projections this time last year had a steady growth in the market for construction volume between 3 percent and 5 percent (dependent upon the sector and geographic location). However the pandemic has reduced these to a contraction in 2021 of approximately 7 percent, with a reversal positive 7 percent in 2022 and between 4 percent and 5 percent for the following years,” said Dan Pomfrett, Cumming’s vice president of forecasting and analytics. So where does Texas stand at this moment? Through nine months of 2020, total building construction value in the Lone Star State is down 6 percent from the same time period in 2019. Pomfrett attributed some of that slowdown to the petrochemical industry. “The impacts of lower fuel prices, production rate changes and, in some
cases, a pause on construction are starting to ripple through the region,” he said. While hospitality and retail sectors are garnering headlines for taking the brunt of the pandemic’s blow, Pomfrett said green shoots are starting to be seen “particularly in the renovation and repurposing of existing buildings.” Another bright spot is housing, per Branch. “Within Texas, the residential market stands out as a clear winner driven by strong single-family activity, while nonresidential buildings are on the decline,” he said. According to Dodge research, San Antonio is showing the most growth, posting a 10 percent year-to-date gain for building construction, largely built on the strength of single-family activity. Click to read more at www.rednews.com.