Commercial real estate markets in California and around the country should continue to provide investors with solid and steady returns in the months ahead according to figures released by NAI Global. The New Jersey-based brokerage firm came to this conclusion after studying vacancy and rent trends in 21 major U.S. markets. According to the company's second quarter assessment, vacancy rates in the industrial, office and retail sectors are hovering near or at lows not seen in years, and rents continue to increase in most markets even in the much-maligned retail segment.
A buyer considering a purchase of commercial real estate in California will have many details to consider before committing to a deal. In general, a seller should grant the potential buyer a period of time to conduct due diligence. This investigative period allows the buyer to weigh the asking price against factors that influence value and liability. Essential issues to check include the status of the title, zoning, compliance with environmental regulations, cash flow and lease agreements.
According to forecasts from the National Association of Realtors, commercial real estate vacancies are expected to fall about 1.1 percent to 11.9 percent. The industrial sector is also set to experience a 1.1 percent fall in vacancies to 7.8 percent over the coming year. Vacancy rates are also expected to fall in the retail and multifamily sectors of the commercial real estate market as well.
It's not unusual for people living in California to consider the purchase of an investment property. Many people appreciate the security of owning real estate rather than worrying about ever-fluctuating stock prices. While real estate can be a good investment, it also has its pitfalls, particularly for novice property owners.
Commercial property owners in California might be able to optimize their properties by implementing smart building technologies. These technologies may help by connecting the various processes within buildings to improve energy efficiency while providing visualizations of how the various systems are working.
The election of United States President Donald Trump in 2016 has left California investors wondering about the future of commercial real estate. There were many reasons to be optimistic; after all, the Trump fortune was largely built on his real estate development acumen, and thus it would stand to reason that this sector may flourish under his administration. After more than six months of Trump in the White House, however, the bullish sentiment on commercial real estate has subsided to some extent. Nevertheless, there is still plenty of action in this economic sector.
California residents who are involved in the commercial real estate market likely know that August is normally the slowest month of the year for transactions. This year has been different, however, and brokers across the nation have reported brisk business thus far during the first part of the month.
California residents may be aware that the International Olympic Committee has announced that the 2028 Summer Olympic Games will be held in Los Angeles. This will mark the third time that the city has hosted the quadrennial games, and area real estate developers are hoping that the event will help Los Angeles to cement its reputation as a global commercial hub. In addition to attracting large numbers of tourists from around the world, hosting the games could prompt city planners to approve a number of mass transit and infrastructure projects that have been delayed for years.
California's economy grew at a rate of 3.2 percent in 2016, and the Golden State's gross domestic product has now reached $2.5 trillion according to the Legislative Analyst's Office. This kind of growth creates jobs and stimulates residential real estate markets, but getting even small-scale housing projects off the ground can be challenging for developers. Many developments are fiercely opposed by organized groups of local residents, and some leading media outlets have described the developing situation as a full-scale housing crisis.
Lenders in California and around the country are generally cautious when loans are secured by real estate, and they tend to follow safe and sound banking practices when judging area market conditions and local property values. However, federal regulations require real estate evaluations to be performed by licensed or certified appraisers in certain situations. The minimum threshold for commercial real estate loans has remained unchanged since being set at $250,000 by federal banking agencies in 1994, but it would be increased to $400,000 if proposed rule changes take effect.