- July 1, 2021: Vol. 33, Number 7

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Lending activity is a tale of two cities

by Loretta Clodfelter

Commercial real estate lending activity has reflected a divergence between primary and secondary markets.

“I like to think of it as a tale of two cities: secondary metropolitan areas — e.g., Salt Lake City, Pittsburgh, Raleigh, Nashville, etc. — and gateway markets — e.g., New York City, San Francisco,” says Perry Freitas, managing director at Hudson Realty Capital.

Borrowers faced different challenges in secondary markets versus primary markets.

“Borrowers in regional, secondary cities have prospered as the greater population has migrated out of the gateway cities in search of more space and value for your dollar,” adds Freitas. He notes borrowers in those markets have been more affected by inflationary issues, including the high cost of lumber and other construction materials, and a lack of reliable construction financing.

“On the other hand, in major metropolitan areas, borrowers have been impacted by operating fundamentals due to lack

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