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8 HARTFORDBUSINESS.COM | APRIL 15, 2024 Developer Amit Lakhotia in one of the downtown New Britain buildings he has been redeveloping into apartments. HBJ PHOTO | STEVE LASCHEVER Credit Crunch Commercial lending activity has slowed in CT; will the pace pick up in 2024? Stalled projects will depend on it by a slowdown in the growth of new loans. Bankers and developers attribute that to a mix of economic uncertainty and high interest rates and construction costs. Predictions vary, but some expect activity to pick up in 2024, as economic conditions stabilize. 2023 slowdown The pace of lending for construc- tion and/or the purchase of retail, warehouse, office and other commercial properties among 27 banks headquartered in Connecticut — excluding Webster Bank — rose by hundreds-of-millions of dollars in 2020, and again in 2021, and then surged by 18%, or $1.29 billion, in 2022, according to Federal Deposit Insurance Corp. data compiled by the Hartford-based Bank Analysis Center. Last year, however, bankers and borrowers took their foot off the gas, and the amount of commercial loans held by Connecticut banks increased by a far more meager $282 million, or 3%. The Bank Analysis Center excluded Webster Bank from the analysis because its merger with New York- based Sterling Bank would signifi- cantly skew yearly comparisons. "(Banks) have stiffened up," said Bank Analysis Center President John Caru- sone. "It went from 18% to 3% (growth). It went down by a billion dollars." The amount of loans held by Connecticut banks for multifamily assets grew 2% in 2020, 9% in 2021, then soared 37% in 2022, before moderating to 16% last A rendering of the first apartment building proposed for the "Port Eastside" redevelopment of the Founders Plaza office park in East Hartford. RENDERING | CONTRIBUTED By Michael Puffer mpuffer@hartfordbusiness.com O ver the past two years, developer Amit Lakhotia has invested $5.5 million to convert the former five-story, roughly 125,000-square-foot former Stanley Black & Decker headquarters on Myrtle Street in New Britain into 115 apartments. During that time, the project's estimated budget has jumped from $7.5 million to $15 million due to inflation, an increase in the number of planned units and unexpectedly high costs to move through the state's environmental certification process, Lakhotia said. Lakhotia is now looking for $10 million in capital to complete the project before the end of this year and begin renting in early 2025. But the search has been difficult. One bank would only lend about half the money Lakhotia is seeking. Talks are ongoing with another bank. If that doesn't pan out, Lakhotia said he could turn to a private equity lender — with rates of up to 14% — to complete the project. "It's tough and getting tougher," Lakhotia said of the borrowing climate. Access to capital for commercial borrowers in Connecticut tightened up significantly in 2023, as evidenced John Carusone