How to Benefit from the Commercial Real Estate Revolution

The world of real estate is constantly changing, so it should come as no surprise that new trends have been introduced over the past few years. One of the more common trends that we are now seeing is a lack of need for commercial property, as countless offices are now laying vacant. It is believed that the vacancies in commercial properties will continue to increase moving forward and, as a result, rent prices will drop for all sectors of real estate. The number of distressed sellers on the market is created a great situation, however, for liquid investors who can pay cash for these properties.

The bargains that are currently available for people who can afford to sit on a property for a few years are absolutely amazing and should turn some of the deals that are currently taking place into life changers in the near future. The rebound is expected to take place before 2012, which will leave these liquid buyers in great shape long term. By the end of 2010, we should see more capital going back into the commercial market, but it will continue to slow down for the time being because of high interest rates.

There are always going to be differences in real estate trends that are specific to geographic location. For instance, while much of the country’s commercial real estate market is being battered, the negative effects are less noticeable in Washington, DC and surrounding communities. While not immune to the higher vacancy count, this region’s market has been helped by medical and government spending which made it easier for businesses to weather the recession. Some other top cities around the country have also experienced changes in price and demand for real estate. You need to be able to look at the trends to understand whether you should be buying or selling. One example of a buyer’s market is San Francisco. The City by the Bay has had some marked decreases in property values that now make real estate in this coastal community an ideal investment option.

For someone involved in sales of commercial property an appealing city is that of Austin, Texas. Unlike many similar sized communities this one has a stable business base and shows steady real estate valuation during the past decade. This makes it less vulnerable to the real estate market’s recent downward trends. The stability, and expected future growth, of this southwestern town means that sellers have the upper hand. The vacancy rate in Boston has managed to remain less than 10% during the recent upheavals and economic woes. Most experts regard this as indicative of the fact that the city’s real estate industry will escape the recession relatively unscathed. The story changes when you look at the real estate market in New York. Vacancy rates have climbed and office space rentals have dropped by almost 50%. You might expect all property owners to be searching for buyers, but savvier investors are content to wait out the downturn.

This trend towards dropping commercial properties and an increase in vacancies is not good news for those who are currently sitting on this property, but will definitely be good news for people who can afford to buy right now and wait this downturn out. There are good deals to be found right now, as long as the investor is not relying on rental income to drive the property for the next few years.

by Karen Lissack
Source: NAI_NP_Dodge