Small and mid-cap banks are carving out a bigger foothold in commercial real estate lending—and they are competing more aggressively to win deals. A recent market update from Fitch Ratings highlighted the shift in market share that is tilting more in favor of banks below $100 billion in assets.
Notably, Associated Bank has seen a bigger increase in its construction lending business over the past two years. “The reason for that is because of the increased competition from non-banks coming into the space,” says Greg Warsek, commercial real estate senior regional manager at Associated Bank in Chicago.
Debt funds have been grabbing more market share in bridge lending for repositioning and renovation projects. However, those non-banks are less interested in doing construction loans, which is providing more opportunities for small and mid-size banks to grow in that sector.
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