Beau Byrd Quoted in the BBJ on Potential Growth in the CRE Segment
January, 2025 - Birmingham, Alabama
Bradley attorney Beau Byrd was quoted in the Birmingham Business Journal on his forecast for commercial real estate (CRE) loans in the new year.
Byrd said his profession saw less activity in the space recently, but that could change. “I think overall our group has been down,” he said. “And traditional commercial real estate lending was down.”
Byrd noted there were fewer pay-downs of commercial real estate loans recently, meaning banks retained more of them on their balance sheets, and therefore made fewer commercial real estate loans because they already had some concentration in that space.
Byrd believes the new year will bring some movement on that front. “When debt becomes more readily accessible,” he said, “and the banks are willing to make construction loans, then I think we’re going to start to see it. I’m getting that indication from talking to some banks that are saying, ‘hey, we’re ready to start making loans.’”
Byrd explained that the ability to make a relatively high return on money left in the bank with relatively high interest rates also kept some equity investors on the sidelines and out of projects. “Let’s say I can earn 4% at the bank,” he said. “If I’m an investor, and I’ve got $1 million of cash, I’ve got to have enough differential between 4% that I could just get sitting in a money market account versus what kind of return can I get if I put it in this commercial real estate transaction?”
Byrd thinks equity investors will be able to generate high enough returns in commercial real estate deals in 2025 to justify more of them happening. “One, you had a lack of debt, you had equity people that were pulling back because they couldn’t get the return they wanted, and the deals weren’t penciling out,” he said.
Byrd also believes the largest of spikes in construction costs have mostly passed. “Is it going to be like we’re going to go from zero to 60? I don’t think so. I don’t think that it’s going to just take off,” Byrd added. “But do I think it’s going to be more positive for ’25? Yes, absolutely.”
The full article, “Banking lenders, attorneys watching for growth in CRE segment,” was published by the BBJ on January 5, 2025. (login required)
