#CREF2020: ‘There’s Never Been a Better Time to be In Our Industry’

SAN DIEGO–The commercial real estate sector is well-positioned for 2020, but there is work to be done, Mortgage Bankers Association executives said here at the MBA 2020 Commercial Real Estate Finance/Multifamily Housing Convention & Expo.

MBA President & CEO Robert Broeksmit, CMB.
MBA President and CEO Robert Broeksmit, CMB, noted CREF unites capital sources across the spectrum. “From bank portfolios to debt funds, from Fannie, Freddie and FHA loans to commercial mortgage-backed securities and life insurance firms, you cover every side of the financial world. And while your specialties differ, your impact is the same: you finance America’s future.”

Broeksmit highlighted several recent wins for the industry. “Just look at what we accomplished in December,” he said. “For six years, we worked with lawmakers and regulators to fix the broken High Volatility Commercial Real Estate Rule.” The initial regulation dates to 2013 and failed to reflect the reality of acquisition, development and construction lending, which meant fewer loans and less liquidity in a crucial market sector, he said.

“Two years ago, we worked with Congress to pass a law that forced banking regulators to revise the [HVCRE] rule,” Broeksmit said, noting the final rule now reflects commercial real estate priorities. “For the first time in a long time, we have an HVCRE rule on the books that makes sense,” he said.

Another major industry victory was December’s Terrorism Risk Insurance Act re-authorization. “Normally, when there’s a deadline, Congress waits until the last minute to do anything,” Broeksmit said. “Not this time. In December, with more than a year to go, the House and Senate reauthorized TRIA. Big bipartisan majorities came together to get it done.”

TRIA’s last extension lasted for five years, but this time Congress re-authorized it for a full seven years, Broeksmit said. “TRIA is up and running through 2027,” he said. “And as an added bonus, the same bill extended flood insurance through September 2020 to give us more time to finish long-term reform.”

Broeksmit said MBA is focused on rent control at the state and local levels, which he called “an unproductive response to the shortage of affordable rental housing.” He said a “dangerous” bill in New York City would be the first law in the nation to impose rent control on non-residential commercial properties if it passes.

“No matter what form it takes or where it arises, we know that rent control is not the solution to the affordable housing crisis,” Broeksmit said. “It will only reduce the quantity and quality of rental housing, hurting the people it’s meant to help. We will continue to speak for your companies and all consumers by advocating a simple message: we recognize that there is a shortage of affordable rental housing, but rent control is not the answer.”

MBA Chairman Brian Stoffers, CMB

MBA Chairman Brian Stoffers, CMB, Global President of Debt & Structured Finance with CBRE, Houston, said the industry has made “significant progress” on the public policy front. “We continue to push for housing finance reform,” he said. “We kept flood insurance from becoming an impediment to your transactions. After two-plus years of short-term extensions, we got Congress to re-authorize it through September while negotiations on a longer-term fix continue.”

Stoffers said two of his biggest initiatives while MBA chairman are diversity and innovation. “Both are critical for your businesses’ agility in 2020 and beyond,” he said.

Stoffers said diversity has long been one of his passions at CBRE. “First and foremost, diversity is the right thing to do,” he said. “People of all backgrounds and beliefs deserve the same career opportunities that I’ve had. Our industry can and should be a model for the nation. Second, diversity is the smart thing to do. New people have new perspectives and can help us design new products and services. It’s essential to keeping up with a changing and more globalized economy. A more diverse workforce will allow us to make a bigger difference for more families, clients and business partners we serve.”

MBA’s second big initiative this year will be innovation, Stoffers said. “I don’t need to tell you how quickly the market is shifting,” he said. “Confronted by change, our companies must innovate. There’s no other way to be on the industry’s cutting edge. That’s where you belong, and that’s where MBA will help you get and stay.”

Stoffers said he felt significant optimism among convention conference attendees for the future. “Last month, you told us that you expect commercial and multifamily originations to rise again in 2020. Nearly two-thirds of you told us it’s going to be bigger than last year,” he said, noting MBA’s latest forecast predicts commercial/multifamily lending will rise by 9 percent in 2020. “That means you’ll close a record $683 billion in loans,” he said. “As a CREF man myself, I never dreamed that these numbers would be possible. There’s never been a better time to be in our industry.”