Commercial deals are drying up in Wichita, falling at a faster rate than a national study indicates due to tight lending standards, experts say.
Local commercial brokers say sales activity is off 30 to 40 percent this year, far ahead of the 10 percent national pace in this month's National Association of Realtors Commercial Member Profile, which measures sales volumes from 2006 through 2008.
"It's pretty stagnant right now," said Gary Schmitt, who oversees residential and commercial lending at Wichita's Intrust Bank.
Locally, commercial business has slowed to a trickle. Deals are getting done, but they're with big down payments and spotless credit histories.
"We're figuring 30 to 40 percent down in sales transactions," said Marlin Penner, president of NAI John T. Arnold Associates. "And financing is the big reason."
Many deals require 30 to 40 percent down to land financing, Schmitt and Penner said. And refinancing often requires cash up front to complete, to increase the buyer's equity stake in the property.
Steve Martens, president of Wichita's Grubb & Ellis/Martens Commercial Group, said the Wichita commercial market is "all over the board."
"I've seen deals that require those kinds of terms, and I've seen refis where the loan amount was recast or the interest rate was recast," he said.
Martens said the local commercial market is at "a very challenging point in this economic cycle."
"A lot of buyers who have the cash to buy believe we're not at the bottom, so their motivation to purchase is only if we're buying at a rock bottom price," he said.
"Because we didn't have wild speculation leading into this economy, most of the sellers recognize that their value, while off its peak, is not in a forced sale situation.
"So we've got both groups on the sidelines — buyers and sellers — waiting for some magical answer."