Law Office of Henry B. LaTorraca Civil Trial Attorney

First quarter commercial property sales down by 18 percent

Commercial property investors and developers in California have generally fared well in recent years, and the markets in gateway cities like Los Angeles and San Francisco have been particularly active. However, a six-year construction boom has created a glut of apartment complexes, office towers and hotels in many parts of the country. Commercial property sales were down by 18 percent in the first quarter of 2017 compared with the same period a year ago, according to Real Capital Analytics. Industry analysts say that a combination of market forces, political uncertainty and more cautious lending practices are to blame.

Reports suggest that many investors are taking a more cautious approach to the commercial real estate market because of doubts over Presidents Trump's ability to deliver on his campaign promises to reduce regulation and oversight and lower taxes. Others fear that pursuing these policies would create inflationary pressures and drive up interest rates. Property values are largely driven by debt and the availability of credit, and interest rates have already begun to creep higher.

Experts are worried that these uncertainties will prompt sales figures to fall further and put continued pressure on prices. Landlords in cities like New York and San Francisco are already slashing rents and offering incentives to attract tenants. Even if Trump is able to push tax and regulatory reform through Congress, most experts agree that it would likely be several months before government intervention has a meaningful impact.

Attorneys with experience in real estate law may be able to help commercial property owners with the zoning and land use challenges. A lawyer may also revise lease agreements to provide the incentives that demanding tenants expect while still protecting the interests of landlords.

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