Changes to come in the real estate market

On Behalf of | Jun 25, 2018 | Commercial Real Estate |

The commercial real estate market could change in 2018 for investors in California and across the country, according to a report published by the Mortgage Bankers Association. In the annual study, which was released in June, the association said that it expects the current year to be less strong for investments in commercial and multifamily properties, noting that the coming five years may have a different trend than the past five years. The association’s report said that it is unlikely that returns will remain at the same high level that they have boasted in recent years.

The report emphasized that commercial real estate investments will continue to be a solid source of income. However, the association also offered that the growth rate would likely be slower than in previous years as the balance between demand and supply has somewhat evened out. In addition, interest rates are on the rise and net operating income is developing a flatter trend. Property values are, in many places, expected to remain relatively stable or rise in general with the economy, rather than shooting up sharply.

At the same time, however, the association said that tax reforms implemented in 2018 are likely to improve the after-tax profits from commercial real estate investments. In addition, the economy overall is positive, meaning that buildings are likely to continue to have strong occupancy and solid growth in rent payments in the coming years. This underlined the fundamental health of the market, even with some slower growth rates. While industrial properties were considered to have particular upsides, retail properties showed a less positive perspective.

When considering investing in commercial property ventures, there are a number of details to keep in mind. A real estate attorney can work with investors to develop and review contracts.

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