How to Size Up a Commercial Real Estate Lender
Bank on Personal Relationships When Sizing Up Commercial Real Estate Lenders
The commercial real estate and construction business goes far beyond bricks, beams and blueprints. When it comes to choosing a commercial real estate (CRE) bank, the right fit may determine whether your project breaks ground on time or gets tied up in red tape.
In today’s CRE landscape, knowledge and foresight are essential. With the office and hospitality markets projected to rebound in 2022 and beyond, and new opportunities for life sciences development springing up nationwide, exciting opportunities are proliferating. Your projects can benefit from having a bank with a vision that matches yours — and the resources to help you achieve it.
Beyond the basics — your trusted CRE banker
Looking beyond banking basics is important when searching for the right financial services provider to help meet your commercial real estate needs. Most banks offer a suite of treasury management and credit services, although the scope a particular bank offers will vary.
But more demand for real estate projects means more competition for workers in the construction trades, which can affect timelines and project costs. Shifts in the supply chain can delay materials or deliver them all at once, necessitating rapid revisions to your storage or transportation plans. A skilled banking professional can help with seeing the big picture when it comes to financing a project.
To find the right fit — one that will suit your current project and your long-term business for years to come — consider the following less-tangible characteristics:
1. Experience: A banker who is knowledgeable about commercial real estate can be your secret weapon when it comes to getting deals done in a timely manner. A bank with experience in your field likely will be able to craft a deal right at the table — and will deliver on the promises it makes.
2. Support and network: You want a bank that can help you grow — especially if you decide to branch out into other states or expand from your usual niche to include more property acquisitions or ground-up construction. Finding a banker who provides the high-quality service of a local bank along with the connections and expertise a large financial institution offers will go a long way toward helping you meet your business goals.
3. Culture and values: Finding a bank that understands your business culture and knows what your organization values is essential. When your banker knows what is most important to you, they can help you create a more successful financial future.
4. Relationship track record: Knowledge is power, so before signing on with a bank, find out about its track record with long-term clients and investors in commercial real estate and construction. Ask those contacts about deals they’ve done with the bank you’re considering and whether they were satisfied with the outcome and, also important, the process.
5. Perspective: Your business is likely to benefit when you choose a bank with specialized bankers who also pay attention to broader economic factors that can impact your outlook. This perspective can help ensure you invest in or develop properties with the best chance to provide a good return on investment. Because employment rates, for example, can correlate to the need for more office and industrial space, staying on top of labor trends helps commercial real estate businesses anticipate increased demand.
6. Authority to make decisions: A banker who has the power to make decisions on the spot without too many layers of bureaucracy can work to your advantage because they are empowered to tailor terms to your specific needs. As well, knowing you also have access to senior management can provide you with certainty of close, even when timelines are tight.
7. Personal relationships: Establishing a relationship with your banker will make it easier to cut through the red tape to support your financing and other banking needs. If you know your banker — and, more importantly, your banker knows you — you won’t be treated like a stranger every time you call. Look for a bank with professionals who respond promptly to your calls, texts and emails.
In the rough-and-tumble world of real estate development, you understandably need to focus on the project at hand, as well as the big picture when it comes to managing your business. An expert CRE banker who understands you and your industry can enhance your success. Connect with Alliance Bank of Arizona and find out what dedicated relationship banking can do for you.