Trends and speculations give an idea of what the commercial real estate market may have in store for the future
Online, May 3, 2014 (Newswire.com) - The commercial real estate market is growing popular among individuals as they realize its potential for increased profitability and better prospects for investments, states Todd Tretsky of CRE-Finance LLC.
For new and existing investors, there are shared concerns as to what the year 2014 has in store for them in context of the commercial real estate. The reality would vary from market to market, state to state, and county to county. However, experts do predict some commercial real estate trends that would occur, which include:
New Office Supply would Increase
Modernization owing to increasing high new supply and upward pressure will create the need for more office spaces for the growing businesses. Overtime as the pressure is expected to divert to downtown areas, all vacancies would be filled in. Locations that are old and less desired would be modernized to be put into use, new office buildings would emerge and existing buildings may ultimately fall out. The modernization would give gateways to mage-cities in the future. Also, the leasing market will become largely fragmented.
The Recovery of the Suburban
This year the suburban is expected to go urban, in short as the economy is making a recovery commercial activities are bound to intensify. Better work would need better infrastructure to support the economic growth and decision making. To sustain the long-term goals, urbanization would become essential and suburban areas would undergo a major change with increased commercial activities becoming a part of them in due time.
Rising Interest Rates Concerns
Although real estate investments have been preferred by private investors, pension fund raisers and others for a credible investment to count on the ever-increasing interest rates would create concerns. Real estate investment trusts (REITs) that have otherwise lost importance may be able to gain a foothold again owing to this reason. If interest rates continue to rise, the perception of real estate as a helpful ways of spreading risks may change. The key story to look for in 2014 is the way market prices changes due to the current environment.
The Emergence of Shadow Banking
A new concept in the market, shadow banking has been witnessing an upward trend with lending standards expect to loosen. Some experts think the contrary though. What is shadow banking? It involves borrowers pulling out funding from a number of sources including wealthy individuals, family offices and private funds. In this way, traditional banks may lose out on their importance, as these transactions would be performed outside the banking sector and can create an alternate means or institution for funding. Consulting with a real estate agent or expert to do the transaction would be advisable though for buyers and sellers considering this option to finance the deal.
The trends and speculations give an idea of what the commercial real estate market may have in store for the future. For individuals and businesses interested in plunging into commercial real estate investment, taking the expected future market situation, researching upon the market and talking to the experts would prove to be helpful in making the right decision in regard to his/her investments.
If you have any questions regarding commercial real estate or are seeking financing, please reach out to the mortgage professionals at CRE-Finance LLC. Rich Tretsky can be reached at 212-257-7307 and Todd Tretsky can be reached at 212-257-7305. You can also visit us at www.cre-finance.com.
Share: