California commercial real estate investors might be aware that the industry is reaching a peak. This could be cause for concern because a peak could be followed by a steep drop. In April, prices hit a new high, and over the past year, prices have gone up 7 percent.
Compared to the last peak in 2007, apartment prices are 53 percent higher, core commercial prices are 13 percent higher and the overall index is 23 percent higher. According to one price index that focuses on REIT-owned property values, January was the high point. Even if the industry has not yet peaked, it is believed that it might be at a plateau.
There is one significant difference compared to the last peak in 2007. The yield on the 10-year treasury is three percentage points lower than it was 10 years ago. A decade ago, those rates affected cap rates. While it is anticipated that the yield on the 10-year treasury might go up, it is unlikely to increase by more than 1.5 percent.
Buying, selling, developing and managing commercial real estate can be complex, and a number of situations may arise that could benefit from legal advice. Among these are enforcement of liens, title disputes and zoning issues. Both novice and experienced commercial real estate investors may want to work with an attorney in drawing up contracts to help ensure that they are prepared correctly and can withstand challenges. However, issues may still arise. An attorney may be able to assist with disputes, but if it is not possible to resolve an issue out of court, then litigation may be necessary.
