Construction Loan Market in Denver Becoming More Specialized
Construction lending software can help you track shifting opportunities
According to Bruce Alexander, CEO of Vectra Bank Colorado, all factors are in place for continued economic growth in his home city of Denver, resulting in a strong market for most types of construction loans. Many other cities across the country are experiencing similar phenomena, making this an interesting time for construction lenders. If you expect to take advantage of opportunities in your area, be sure you have a specialized construction lending software platform in place to help you out. Now back to Denver.
Lending for Apartment & Condo Projects Drying Up
Alexander reports that his bank and others are now very cautious about extending loans for new residential construction in the Denver area. There’s already $1.5 billion worth of new or planned construction in downtown Denver, including over 2 million square feet of residential property. Lenders will watch the absorption rates carefully as new residential units enter the housing market, wanting to ensure the market is not oversaturated before agreeing to finance anything new.
Another factor driving lenders away from funding condo developments in particular is the fear of litigation over construction defects. Developers are similarly wary of condos for this same reason, and in fact Alexander’s bank has not had a single application for a condo development loan in recent months. Instead, developers are expected to request loans to transform existing apartment buildings into condos once the statute of limitations for construction defect litigation runs out.
Opportunities in Commercial Real Estate Lending
Office and industrial developments in Denver are where the current action is, says Alexander. Despite the fact that commercial real estate lending comes with tighter restrictions, banks are hungry to grow in this area and are becoming more aggressive in their underwriting. Lenders need to be competitive because commercial real estate has outperformed the overall economy and represents an excellent investment, yet commercial real estate space is at a historic low in downtown Denver. This competitive attitude, combined with low interest rates, can lead to some serious benefits for construction contractors seeking funding.
Why You Need Construction Lending Software
If you are in the construction loan business, you need to have a robust construction lending software platform to help you track and manage loan opportunities as well as existing loans. ECL Software’s Fund Control offers an ideal solution. Our Fund Control software includes a variety of tools to help manage and administer the entire disbursement process while minimizing CRE risks. Contact us today to learn more.