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Top Industry Concerns Affecting Commercial Real Estate

Posted on: October 9, 2018

The major issues that affect the real estate industry change on a regular basis. The below concerns have been affecting both commercial and residential real estate recently are expected to continue to do so into 2019.

Before you conduct any transaction, it’s recommended to meet with a Florida commercial real estate attorney to discuss how these concerns might affect your deal and what affect, if any, they might have on the specific neighborhood and property you plan on investing in.

Rising Interest Rates

With continually rising interest rates, a wide range of effects can occur on commercial real estate markets. Some may be good in certain cases, for example, those who own rental properties might see a higher demand as a result of buyer hesitancy to obtain a mortgage. In other cases, retail spending can decline if consumers are more likely to save their money rather than indulge in impulse purchases due to higher credit card interest rates.

Mortgage rates are affected by more than the fed, so the effect of rising fed rates doesn’t always translate to higher mortgage rates. The effects of rising interest rates are sometimes are hard to determine and largely vary from one region to another. But it’s certainly something to think about as you plan your next commercial real estate investment.

Environmental and Weather Concerns

In Florida and other states, environmental concerns are a major consideration, especially with the unpredictability of hurricanes, flooding, and even sea level changes. With many types of commercial real estate investments being for the long-term, it’s essential to consider how environmental concerns will play a role in your investment.

Does the property you are investing in meet minimum flooding prevention building criteria? Is the area you are considering susceptible to hurricanes, and would any downtime from one affect your operation significantly? These are just a few questions to consider.

Housing Supply Issues

One circumstance that has favored commercial developers and investors in recent years has been a significant housing undersupply, including in many parts of South Florida and other rapidly growing regions.

This has driven both the rental and condo/townhouse market. Even older and outdated properties can be attractive for investors if they are located in key job markets and can meet rising demand. There’s no sign of demand slowing down either as the economy continues to remain strong and population levels increase in major metropolitan regions.

To learn more about how these and other factors might impact your next commercial real estate project in South Florida, call Mark Schecter, a leading commercial real estate attorney in Florida at (954) 779-7009.