Insight on Business

Banks are making loans again Commercial and Industrial Loans at All Commercial Banks (BUSLOANS) Source: Board of Governors of the Federal Reserve System 1,600 1,800 1,000 1,200 1,400 600 800 400 1990 1995 2000 2005 2010 2015 Shaded areas indicate US recessions. 2011 research.stlouisfed.org The 'right' projects see funding Area bank executives say the right purchases can get funded, but tend to be "owner/occupier" deals rather than investor developments. "Owner/ occupier real estate projects are, have and will continue to get financed without any problem, because they are financing it for their own use," says Mike Daniels, president of Nicolet National Bank. "The investment-type projects are less prevalent." Tom Mangold, the Appleton market president for US Bank, says the bank experienced "robust" regional activity for commercial real estate loans in the fourth quarter of 2011. The activity, he adds, is centered on properties that are income producing and "stabilized," a term that refers to the predictability of income from a property. Borrowers should be ready to prove their ability to generate operating income from a site, but the money is there for the right projects, Mangold says. "The borrowers have to be able to www. insightonbusiness .com The dollar amount of commercial and industrial loans plummeted during the recent recession, bottomed out last year, and has lately begun to inch upward. tell their story, and be able to back that up with their track record for performance," he says. In short, the market is moving, but not like in pre-recession days. For one thing, investors aren't developing new strip malls or office complexes, says Wade Micoley, president of Micoley & Company Realtors. "'Build it and they will come' is not happening," he says. Activity also varies by sector, says Another bright spot has been industrial properties, notes Mark Denis, an advisor with broker firm Grubb & Ellis | Pfefferle in Appleton. National research from Grubb & Ellis shows that 90 million square feet of industrial space was absorbed in 2011 aſter accounting for space that came on the market. This is an improvement over the positive 14 million square feet in 2010, is far better than the record negative 200 million "'Build it and they will come' is not happening." –Wade Mi coley, pres ident of Mi coley & Company Real tor s Micoley. Stronger sectors include assisted living complexes as well as sales of existing apartment buildings and some construction of new apartments. Both sectors are benefitting from demographic and economic trends that have increased demand. square feet in 2009, and second only to the 100 million square feet of supply absorbed in 2005. The firm notes that low completions of new buildings accelerated absorption of industrial space this year, but still concludes that [continued] » Januar y 2012 • INSIGHT | 31 (Billions of Dollars)

• Cover