Veteran broker says rate cuts alone won’t fix what ails office and multifamily lending
Elliott Kunstlinger (pictured top), who recently joined Eastern Union as a senior mortgage broker, said the reality of those headwinds became clear following a recent conversation with a contact at a major institutional lender.
“Yes, rates are where they are, and everybody likes to point to that,” Kunstlinger told Mortgage Professional America. “But I was having a conversation with a very, very strong contact at a (major institutional lender). And I said, ‘If we did this deal instead of a 7.25% rate, at a 5.25% rate, does it really make any difference?’ And he answered candidly, and he hated the answer, but the answer was no.”
Back to the basics
That answer reframed how Kunstlinger thinks about what is actually blocking deals in the toughest segments of the commercial market. The cost of debt is not the obstacle, he said.
“The selling-the-dream kind of thing has kind of faded,” he said. “Now it gets back to real estate professionals really trying to underwrite operators as opposed to just — we’re buying a 5 cap, and we’re going to sell it at a 4 cap. Now it’s really about back to the basics of really strong operators.”
Kunstlinger said he has seen what that shift looks like in practice. When office got hit hardest, some of his clients moved in specifically because of where prices had gone, with properties that were trading at $1,100 to $1,300 a square foot available at $500 to $600.
