Banks Restrained in Colorado’s Construction Boom

While regulations have financial institutions pulling back on commercial real estate lending, ‘alternative lenders’ are cropping up

Even as Colorado’s commercial real estate market continues to accelerate, many banks in the West are pumping the brakes on commercial real estate lending.

Many financial institutions, tethered by post-recession banking regulations, are hitting or nearing their limits in the CRE loans they can underwrite. But with demand for new CRE deals still high in Colorado — particularly Denver — borrowers increasingly have to look elsewhere for funding, giving rise to more “alternative lenders” in real estate transactions.

CBRE’s Denver Market Outlook for 2017 pegged the city’s CRE market for sustained growth buoyed by a strong economy, which could draw increased attention from national and international investors.

“There’s just a huge amount of commercial real estate activity (in Denver) … with lots of construction going on,” said Lea Ann Fowler, a real estate and finance attorney who is a partner at Hogan Lovells’ Denver office. With plenty of local investors, plus an influx of out-of-state and foreign investors who are “hearing the Colorado buzz” and looking to get a piece of the Denver real estate market, borrower demand for CRE transactions is high, she said.

To read this story and other complete articles featured in the September 4, 2017 print edition of Law Week Colorado, copies are available for purchase online.