Northmarq's Carl Riggins on Rebuilding the Capital Stack for Today's Market

As complex market dynamics continue to reshape commercial real estate development, seasoned professionals are finding innovative ways to structure deals. Carl Riggins, a mortgage banker at Northmarq, brings a comprehensive approach to development financing that spans the entire capital stack. Since joining Northmarq in 2022, Riggins has distinguished himself by leveraging an extensive network of life insurance correspondents and banking relationships to provide customized financing solutions, from permanent mortgages to joint venture equity, preferred equity, and mezzanine debt.

“Three or four years ago, typical outreach would be just pitching a fixed-rate construction product,” Riggins reflects. “Over the last 18 months, we’ve had to completely rethink that.” This reimagining of traditional financing approaches isn’t just a temporary adjustment – it’s reshaping the entire industry landscape.

The New Reality of Capital Stack Assembly

Perhaps the most striking shift has been in the equity placement process. “About four years ago, finding a JV equity player was pretty easy,” Riggins notes. “You’d go to five or six groups, get two term sheets, one would stand out. This day and age, we’re going to forty, fifty groups coming up with nothing.”

This dramatic change has spurred innovation in the capital markets. Riggins highlights the emergence of hybrid equity products that bridge the gap between preferred equity and traditional JV equity. These new instruments can reach up to 85% of cost in some cases, compared to the 75-80% ceiling typically seen with traditional bank debt or debt fund products combined with preferred equity.

Major institutional players are taking notice. “From the big boys like State Street and so forth that all have previous equity arms… they’re happy with the yield they can get in those scenarios while protecting their last dollar equity,” Riggins explains. This trend represents a significant evolution in how institutional capital approaches development deals.

Urban vs. Suburban: A Market in Flux

While capital markets adapt, underlying real estate fundamentals are showing interesting patterns, particularly in Denver. Riggins has observed suburban rents climbing to levels comparable with urban projects on a per-square-foot basis. Rather than seeing this as a permanent shift away from urban cores, he interprets it as signaling significant upside potential for urban developments.

“To me that says there’s a lot of room to grow in the urban projects that have a lot more to offer from their location in a densely populated area, walkability things like that,” Riggins argues. “Particularly as return to office becomes more and more enforced.”

The Institutional Buyer Perspective

One of the more intriguing trends Riggins identifies is the emergence of all-cash institutional buyers in the $50 million-plus segment. These buyers are less concerned with interest rate fluctuations and instead focus on replacement cost metrics and operational efficiencies.

“They’re looking long-term… making sure they’re buying a deal that can’t be built for the same price today,” Riggins explains. “They know they have at least a five to ten-year runway there.” This longer-term perspective allows these buyers to weather short-term market volatility and focus on operational improvements.

Looking Ahead: From Survival to Revival

Despite current market challenges, Riggins maintains an optimistic outlook. He points to macro factors that could drive positive change, including the significant portion of GDP currently going to treasury debt payments. “There’s going to be kind of a come-to-Jesus moment,” he predicts, pointing to recent government budget figures showing roughly 30% of GDP going to treasury debt payments. With the refinancing of long-term bonds on the horizon and consumer spending showing signs of fatigue, Riggins sees mounting pressure for rate adjustments. “The average consumer knows it’s not as rosy as the Dow or NASDAQ show,” he notes, suggesting that economic realities will eventually necessitate policy shifts to fuel growth.

His message for 2025 is clear: success will require innovation. “I think the bigger narrative will be ‘thrive in ’25’ – find a way to get deals done with these high cost of debt,” he states. “Creativity is going to be needed for those that’ll succeed, and the people that are trying to do things the same way as they’ve done in the past are going to be struggling.”

Adapting to Market Evolution

For development financing in particular, Riggins takes a tailored approach, working with clients to structure full capital stack financing solutions that meet their unique needs. His expertise spans from agency lending through Fannie Mae, Freddie Mac, and HUD to more creative solutions like participating mortgages and mezzanine debt. This comprehensive approach has proven especially valuable in today’s challenging market environment.

The key takeaway? The future of commercial real estate finance belongs to those who can combine traditional market knowledge with creative capital stack solutions. As we move through 2025, players who can successfully navigate this evolving landscape while maintaining strong fundamentals will be best positioned to capitalize on emerging opportunities. With his deep understanding of both traditional and innovative financing structures, Riggins and professionals like him are helping shape how the next generation of commercial real estate deals get done.