Sales of Small Buildings Lead Commercial Growth

New York, NY, Aug. 17, 2012 -- According to Bloomberg News, sales of small buildings across the U.S. have risen this year to the highest since 2008 as buyers take advantage of prices that have yet to rebound from the property crash and increased access to financing. 

Improved demand would help broaden a commercial real estate recovery that’s so far been confined to trophy office towers, apartments and malls to a broader swath of the market. Loans for properties valued at less than $1 million account for almost a third of commercial mortgages held by banks, according to Trepp LLC, a New York based bank and real estate data company.

U.S. banks have about $308 billion in commercial mortgages with balances under $1 million, equating to about 29 percent of all commercial-property loans, according to Trepp. Community banks, which tend to focus on small-business clients, are often the lenders for such deals. Loans for less than $1 million account for about 40 percent of commercial mortgages for banks with less than $1 billion of assets, Trepp data show.

“It’s making the market more liquid, more transparent and if we get rid of this distress we’ll have a firmer footing,” said Randy Fuchs, principal and co-founder of Boxwood Means Inc., a Stamford, Connecticut-based provider of data about small commercial properties.

The sales volume for properties of less than $5 million jumped 41 percent in May from a year earlier to $4 billion, Boxwood Means reported this month. Of the 122 metropolitan areas that the company tracks, 88 posted year-over-year increases. Total volume for the first five months of 2012 was $20.3 billion, the highest for the period since 2008.