Law Office of Henry B. LaTorraca Civil Trial Attorney

Commercial property prices stabilize as supply meets demand

Many commercial properties in California come with high price tags, but prices have begun to stabilize after years of growth. Price tracking at one online real estate marketplace indicated a small 0.2 percent rise in the August 2018 price index. Looking back at a full year, the marketplace calculated year-over-year growth at a modest 0.4 percent.

Price tracking from Real Capital Analytics produced a 7 percent increase in prices from July 2017 to July 2018, but the majority of that growth appeared in the early months of the 12-month period. By comparison, this level of growth represents only 50 percent of the price increases experienced across commercial real estate sectors in early 2015.

An analyst from Green Street Advisors explained that supply levels were a little above long-term averages for offices, industrial properties and multi-family housing. With supply able to meet demand, increases in property prices have naturally tapered off. Although demand for space is expected to remain strong, rising interest rates will impede the ability of investors to finance purchases of commercial real estate affordably. Most investors expect the Federal Reserve Bank to issue another interest rate increase in the near future, which could signal a potential recession on the horizon.

Those involved in any commercial real estate transaction or development typically have large sums of money at stake. When issues arise that could jeopardize profits or derail a development, a party might want the advice of an attorney experienced with these types of matters. With legal guidance, the client could decide how to approach problems like title disputes, construction litigation or the enforcement of liens. An attorney could strive to move the deal along by negotiating with the opposing party directly.

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