On February 27, 2023, the Chicago Chapter of The Society of Industrial and Office Realtors (SIOR) hosted its Speaker Series luncheon at Gibsons Restaurant in Rosemont, Illinois. Commercial banking industry experts Zena Diggs, Midwest market executive at Bank of America; Ursula Moncau, president of Schaumburg Bank & Trust Company, NA, a Wintrust Bank; and Alec Bliss, SVP of Associated Bank, gathered to discuss the current state of the capital markets along with the future of commercial loans, interest rates and their impact on CRE and more. The discussion was moderated by Peter Billmeyer, SIOR, co-founder and CEO of Bespoke CRE and SIOR Chicago Chapter President. The event brought together more than 60 SIOR members and guests.
Moderator Billmeyer began the discussion by asking about interest rates—specifically, where things stand and where things are headed. All panelists agreed that interest rates are going to continue to rise in the coming year. There are a few things to be cautious of, panelists noted, but still, loan velocity is there and there are opportunities ahead.
Moncau explained that last year, it seemed like everything was on pause, but Wintrust Financial is now looking at opportunities. “That is not to say that those opportunities are all penciling out,” she added.
While all panelists are still very much open for business for new clients, there is an additional focus internally and on supporting existing top sponsors.
“Transaction volume is less than what it was last year because many of our clients are trying to figure out valuation,” Diggs explained. “We have to look inside our existing portfolio, see cracks that we have to be cautious of and figure out how today’s rates will impact our ability to originate new loans.”
Bliss too is starting to see some stress in the portfolio and is also focusing heavily on internal business. “This is not April 2020 with Covid, but it isn’t that far away…the pipeline doesn’t look as robust as it did six months ago.”
Moderator Billmeyer asked panelists the big “what if” question. “What if this drags out?” The consensus among panelists was that we are in more of a “reset” than a recession.
“For it to really be a harder recession, unemployment would be higher,” explained Moncau. “Restaurants are full, and people are still spending money. There has been so much money pumped into the system with programs that were available.”
She added that while they can lend more, since the debt is sticking around longer, and not recycling as much, there are more conversations with borrowers around putting more deposits in the bank to be able to get debt.
Switching gears, Bliss talked about how the past few weeks have been the most fluid time in his career. “What we wanted to do a few weeks ago is different than what we want to do today,” he said. “The general feeling a few weeks ago was that inflation would start coming down soon and now I think the conventional view is pushed out as far as rates.”
The panel transitioned to discuss how payoffs need to start recycling and happening or it is going to be tough to originate business. Bliss noted that “We need something to break this log jam and give us a boost of confidence. We all want to be more aggressive than we are right now.”