Credit for business eases in Wichita

Credit remains tight in the national commercial real estate market, officials told a U.S. House panel.

"Right now, nationwide, there are two means of available credit for commercial buyers," said Lucien Salvant, a spokesman for the National Association of Realtors.

"Little and none."

But in Wichita, banks are beginning again to court commercial business under the "new" rules of engagement, including higher down payments and solid business plans.

Jim Helsel, treasurer of the National Association of Realtors, appeared before a House panel Thursday to ask for action on a series of initiatives to loosen commercial credit.

Helsel appeared in support of H.R. 5297, which would allow Small Business Association loans to refinance performing commercial property, and H.R. 3389, which would allow credit unions to lend more to businesses, potentially reducing commercial real estate vacancies.

But in Wichita, commercial brokers say banks are ready to lend for the right deal — a 25 percent down payment, a good location and a solid business plan.

"We've been fortunate in Wichita in that our local lenders have remained willing to work with us," said Steve Martens, president of Wichita's Grubb & Ellis/Martens Commercial Group.

"The challenge lies in the raised level of federal regulation and scrutiny, or rather in the constantly changing criteria they've applied during these times."

In fact, Wichita banks are beginning to court some kinds of commercial business, said Marlin Penner of NAI John T. Arnold Associates, the lead broker for WaterWalk's commercial space.

"I'm feeling much better about our situation in Wichita than I was 90 days ago," Penner said. "The banks are calling again saying, 'We're in business. We have money.'

"Of course, they're going to be cautious, but the fact that they're out there soliciting business again is encouraging."

NAR is also supporting a Senate plan to increase commercial property depreciation allowances, a move that should draw more equity investment, Helsel said.

The national advocacy group also supports H.R. 5816, the Commercial Real Estate Stabilization Act, designed to clear troubled properties off the market.

"Commercial money has flatly dried up," Salvant said, "and it's completely different than the residential market."

Most commercial mortgages are either five-year, low-rate deals with a large balloon payment that has to be refinanced, Salvant said, or they're five-year adjustable rate mortgages that are then subject to further adjustments at the discretion of the lender.

"It's paralyzed the market, because lenders either aren't honoring loans or buyers can't cope with any change whatsoever in the interest rate," Salvant said.

"The result has been a lot of foreclosures."