Los Angeles Commercial Mortgages
At Select Commercial, we pride ourselves on 35+ years of experience helping clients in Los Angeles with their commercial mortgage needs. Our commitment to excellence has helped create our reputation as a top-tier broker in the city. If you're specifically interested in multifamily units in Los Angeles, we have dedicated resources to guide you. For those seeking comprehensive rates on all loan products available across the 48 states, our comprehensive rate page offers competitive rates for loans starting at $1,500,000.
Los Angeles Commercial Mortgage Rates - updated 09/26/23
|Minimum Loan Size $1,500,000||Get Free Quote|
|Commercial Real Estate Loan||6.55%||Up to 75%|
|Single Tenant Lease||6.35%||Up to 75%|
|Business Real Estate Loan||6.45%||Up to 90%|
Los Angeles Commercial Mortgage Benefits
CA commercial mortgage rates start as low as 5.64% (as of September 26th, 2023)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on multi family , 75% on commercial (90% with SBA)
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
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Distress is currently low in the commercial real estate market. After Signature Bank and Silicon Valley Bank failed, there was widespread concern that other regional and local banks would fail due to the high levels of commercial real estate loans held in their portfolios. With the exception of some market sectors, most commercial mortgage portfolios have performed well. Usually, during times of market uncertainty, commercial real estate distress levels increase dramatically. Current levels of distress are low by historical standards. At the end of 2022, the level of commercial real estate assets under distress was only 1.2% of the total national sales volume. This number is important to watch as many loans face maturity and higher rates upon refinance in 2023.
MSCI, Inc. estimates the volume of loans maturing in 2023 at $400 billion. The Mortgage Bankers Association pegs the amount at over $700 billion. Many analysts predict that loan defaults will increase for two reasons: many of these maturing loans will need to be refinanced at higher rates (and may suffer cash flow problems) and there are fewer active lenders in the market due to the recent bank failures. Loan underwriting has tightened up as the result of global financial conditions and the average loan to value has been dropping on new originations. Many properties have been able keep pace with the market due to escalating rents and strong appreciation. Other properties, mainly in the office and retail sectors, have suffered due to higher vacancy factors and fixed long-term rental rates. Operating income growth has been strong in the multifamily and industrial markets, which represent about 35% of the maturities in 2023. Revenue growth in the office market has been flat for the past five years and vacancy rates have risen. This sector, which accounts for about 26% of 2023 maturities, is expected to see a significant increase in distress and defaults as many properties will not underwrite well enough to pay off existing loan balances.
In February 2023, Trepp Inc., a data analytics company, reported an increase of commercial mortgage-backed securities loans (CMBS loans) going into special servicing. They estimate the percentage of these loans at 5.2%. Many of these properties, including office buildings and retail centers, may be subject to distressed sales. In addition, many borrowers with adjustable-rate loans also face distress unless they hedged their risk with interest rate caps. These adjustable-rate borrowers are seeing current rates generate debt payments which exceed the net operating income of the property and an inability to raise rental rates to keep pace with the increases in debt service. Many of these borrowers will need to either sell the property in a distress sale or invest more capital into the property and refinance for lower loan amounts.
National, regional, and local banks hold more than half of the total amount of commercial real estate loans which will mature in 2023. So far, we have not seen distress levels high enough that would threaten the financial stability of these institutions. Most lenders are likely to extend impending maturity deadlines as opposed to foreclosing as foreclosure would cause losses. Many will employ other methods, including extensions and workouts, for the foreseeable future.
Most analysts agree that the problems encountered by Silicon Valley Bank and Signature Bank are not applicable to other small and local banks with commercial real estate portfolios. These two large bank failures were caused by much more specific situations. Silicon Valley Bank was too concentrated in the venture capital and technology sectors and did not diversify their lending. Signature Bank was too narrowly concentrated in the cryptocurrency sector, a market sector under intense scrutiny of federal regulators.
The commercial real estate market is very varied. There are many different sectors, geographic areas, and borrower types. Banks that lend to this market are able to diversify their risk by lending to a wide variety of borrowers and limiting their exposure to any one particular area or property type. Lenders who employ diversified lending practices and have conservative underwriting guidelines are likely to experience little or no distress or financial losses during this current market cycle.
Some commercial mortgage lenders lock rates at application, some lenders lock rates at commitment, while others lock rates prior to closing. We are currently in the midst of an increasing rate environment. Rates quoted at application may increase dramatically during the loan application progress, if not locked. It is very important to understand your lender’s procedure upfront to avoid potential confusion.
In order for a commercial mortgage lender to issue a firm loan approval, they will want to understand the financial condition of the borrower, as well as the fundamentals of the property. The borrower will be expected to supply his personal financial statement showing total net worth and liquidity. He will also need to provide a schedule of real estate owned demonstrating experience managing similar properties. Lastly, the borrower’s credit scores will needed. For the subject property, lenders will look closely at the current rent roll, operating statements showing income and expenses, copies of all leases, and other pertinent property information.
Commercial mortgage rates are determined by many different factors, including property type, location of the property, loan-to-value ratio, debt service coverage ratio, debt yield, borrower’s net worth, liquidity, credit rating and level of experience. Commercial mortgage lenders look at all of these factors to determine the riskiness of the loan before setting rates. Loans with the lowest risk profile will get the best commercial mortgage rates. As the potential risk increases, commercial mortgage rates usually increase.
Commercial mortgage loans are viewed differently by lenders than residential loans. Home loan lenders look strictly at the borrower’s income and credit in order to qualify. Commercial mortgage lenders look at the subject property’s rent roll, operating statements, and other factors to determine the cash flow or net income potential. Very strong (low risk) commercial mortgage loans might be priced lower than home loans, while weaker performing properties (higher risk) might be priced higher.
Most commercial mortgage loans today are fixed for 5, 7, or 10 years and come with a 25-30 year amortization schedule. Loans can be recourse (personal guarantee) or non-recourse (no personal guarantee). Commercial mortgage loans typically carry prepayment penalties, whereas residential home loans usually do not. Specific terms will be determined by your lender’s underwriting team after your application is reviewed.
Commercial mortgage lenders typically lend up to 75-80% on an apartment purchase (down payment of 20-25% necessary). On other types of commercial property, commercial mortgage lenders will typically lend up to 70-75% (down payment of 25-30% necessary). An exception is for owner occupied business real estate (such as a business owner buying his own property). Owner/users may qualify for up to 90% LTV financing.
Select Commercial is a leading commercial real estate loan provider. We have excellent commercial real estate loan products and options available for owners and purchasers of commercial real estate. While we lend across the entire continental United States, we are able to give our best commercial mortgage rates and loan programs to certain areas that we feel are strong markets. Los Angeles is one of the cities that we consider to be a premium market and we actively look to originate good quality loans here for our clients. As an experienced commercial mortgage professional, with over 30 years of lending experience, we have many sources of capital to choose from when placing a commercial mortgage request with a lender. Having many lenders to choose from gives us advantages over any one individual source. Finding the lender that fits the needs of each client is what we do best. In the end, you get the best rate and terms available. If you are looking to obtain a commercial real estate loan, don't hesitate to contact us. There are many reasons why our customers like doing business with Select Commercial. We have a simplified application process and we do not charge any upfront application or processing fees. We typically offer 24-hour pre-approvals with no-cost and no-obligation. Our long term fixed rates are excellent, and we look to close within 45 days of application. Our staff is professional and knowledgeable, and we look forward to working with you on your next commercial mortgage transaction.
Los Angeles Office Commercial Real Estate Insights: Q2 2023
Los Angeles, a bustling hub for diverse industries, has seen a shift in its office sector dynamics in Q2 2023. Dive deep into the current state of office rentals in the city and the role of commercial real estate loans in shaping this landscape.
Office Market Overview:
The office sector in Los Angeles has been grappling with challenges, with the vacancy rate soaring to a record 13.1% by mid-2023. The rise of hybrid work models and the increase in remote working have contributed to the surge in unoccupied office spaces.
Adapting to New Work Norms:
Despite the high vacancy rates, Los Angeles remains a pivotal location for businesses, especially with the city's tech and entertainment sectors. Commercial real estate loans in Los Angeles are enabling businesses to adapt to these changing work norms and secure prime office spaces.
Future of Office Spaces:
With the city's continuous evolution and growth, the demand for office spaces is expected to stabilize. Los Angeles Office Commercial Real Estate Loans will be instrumental in aiding businesses to navigate this dynamic market and secure prime office locations.
The office rental landscape in Los Angeles is undergoing a transformation, closely tied with commercial real estate financing. As businesses adapt to the changing work environment, Los Angeles Office Commercial Real Estate Loans emerge as a strategic tool. To explore tailored solutions and gain deeper insights, get a free quote from Select Commercial today.
Los Angeles Industrial Commercial Real Estate Insights: Q2 2023
The industrial sector in Los Angeles has shown resilience in Q2 2023, despite a slight slowdown from its peak during the pandemic. Delve into the current state of industrial rentals and the significance of commercial real estate loans in this sector.
Industrial Market Dynamics:
While the industrial sector experienced a slowdown, it remains robust with a vacancy rate of 4.7% and average asking rents rising by 4.4% to $11.32 per square foot. The city's expansion in e-commerce and logistics has been a driving force behind the demand for industrial spaces.
Los Angeles Industrial Commercial Real Estate Loans are playing a pivotal role in supporting businesses in this sector. With the expertise of Stephen Sobin and the resources at Select Commercial, investors are well-positioned to capitalize on the opportunities in the industrial real estate market.
The industrial landscape in Los Angeles is closely intertwined with commercial real estate financing. As the city's industrial sector continues to grow, businesses need the right financial solutions to thrive. For a comprehensive understanding and tailored financing options, get a free quote from Select Commercial today.
Los Angeles Retail Commercial Real Estate Insights: Q2 2023
The retail sector in Los Angeles has shown adaptability and resilience in Q2 2023. Explore the current dynamics of retail rentals in the city and the role of commercial real estate loans in shaping this landscape.
Retail Market Overview:
The growth rate for retail spaces in Los Angeles was about 1% in Q2 2023, with a vacancy rate of 5.1%. The average asking rent stood at $3.21 per square foot, indicating a market adapting to the city's evolving consumer behaviors and economic conditions.
The city's strengthening economy and changing consumer behavior are driving the demand for retail spaces in prime locations. Los Angeles Retail Commercial Real Estate Loans are facilitating businesses to capitalize on these trends and secure strategic retail locations.
The retail landscape in Los Angeles is dynamic and closely linked with commercial real estate financing. As the city's retail sector evolves, businesses equipped with the right financial solutions are set to thrive. For deeper insights and tailored financing options, get a free quote from Select Commercial today.
Los Angeles Hotel Commercial Real Estate Insights: Q2 2023
Q2 2023 has been a period of recovery and growth for the hotel sector in Los Angeles. Dive deep into the current state of hotel rentals in the city and the significance of commercial real estate loans in this sector.
Hotel Market Dynamics:
The occupancy rates for hotels in Los Angeles averaged 82.3% in Q2 2023, marking a 4.6% increase from the previous year. The average daily room rate also witnessed a rise of 3.7% to $196.74, reflecting a hotel sector that's rebounding post-pandemic.
Tourism and Business Travel:
The resurgence of tourism and business travel in the city is driving the demand for quality accommodations. Los Angeles Hotel Commercial Real Estate Loans are playing a crucial role in supporting hoteliers and investors in capitalizing on this growth.
The hospitality sector in Los Angeles is closely linked with commercial real estate financing. As the city's hotel industry continues to grow, businesses need the right financial solutions to succeed. For a comprehensive understanding and tailored financing options, get a free quote from Select Commercial today.
What areas of Los Angeles does Select Commercial provide financing?
Select Commercial provides commercial real estate loans throughout the city of Los Angeles including but not limited to the areas below.