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CRE delinquency rates up by 28 basis points in June

Much has been written about a looming wall of commercial mortgage-backed securities that will either have to be refinanced or paid off in 2017. About $2.4 billion in CMBS issued in 2006 and 2007 were classed as delinquent in June, and experts believe that this could have caused delinquency rates in Missouri and around the country to soar to 5.75 percent. The 28 basis point surge is the biggest increase in five years according to a real estate information and consultancy firm. The delinquency rate stood at 4.6 percent in June 2016.

Due diligence in commercial property transactions

Commercial property buyers in Missouri and around the country may be drawn to an office building, retail store or warehouse because it is located in a thriving area or has the potential to provide solid returns, but they will usually wait until due diligence efforts have been completed before making any kind of commitment. During the due diligence process, commercial real estate investors seek to learn more about the financial, legal and physical condition of properties.

Loan refinancing becoming more difficult for owners and banks

Commercial property developers in Colorado and around the country generally take short loans of between five and seven years to get their projects started. These loans must then be paid off and refinanced after construction work has been completed. Sources of refinancing capital have been relatively easy to find in recent years as the economy thrived and commercial property values soared, but industry experts say that a confluence of factors is now making things far more difficult for developers in need of cash.

Foreign investors still bullish on American CRE

Investors in Missouri and around the country are drawn to commercial properties because they generally offer robust yields and provide a hedge against inflation, and a report from the National Association of Realtors suggests that foreign investors also see American office buildings, warehouses and stores as safe places to put their money. The trade group's Commercial Real Estate International Business Trends survey reveals that one in five of the realtors who closed a commercial property deal in 2016 did so with a foreign investor.

Slowdown in real estate lending sharpest in commercial sector

Real estate experts in Missouri and around the country have predicted for some time that rising interest rates and more conservative lending practices would make financing more difficult to come by for property developers and investors. Data released recently by the Mortgage Bankers Association suggests that these effects are now being felt. The trade group reports that mortgage closings in 2016 were down by 3 percent overall and 7 percent in the fourth quarter.

Political uncertainty may be cause of CRE slowdown

Data from leading research and brokerage firms suggests that commercial property developers in Missouri and around the country are finding it increasingly difficult to secure financing for their latest projects. Property sales figures in the first quarter of 2017 for the nation as a whole were down by 18 percent compared to a year ago according to Real Capital Analytics, but Cushman & Wakefield have reported that they plunged by an alarming 58 percent in New York City.

Commercial property investing offers many advantages

Real estate investors in Missouri and around the country are becoming increasingly interested in commercial properties like offices, stores warehouses and garages. Commercial landlords generally have more businesslike relationships with their tenants, and they rarely have to deal with minor issues or address petty grievances. Most business tenants have reliable sources of income, and they also tend to be more stable and predictable than residential renters.

An overview of the commercial lending market

Nationally, the commercial real estate lending market has begun to tighten as lenders begin to hit capital control restrictions. Other regulatory restrictions may further tighten the commercial real estate lending market. However, those looking to develop Colorado properties may find that there are plenty of opportunities to borrow money. This is because commercial real estate markets correlate highly to local economic conditions.

What to expect during commercial lease transactions

When opening a new or additional business location, Missouri business owners will face plenty of vital details to address first. Besides the work involved in the physical move, there may be some unexpected or unknown issues to handle after a commercial lease is signed, such as licenses and permits, lease details and multiple inspections.

Commercial real estate and increasing interest rates

Missouri commercial real estate investors and developers likely know that the Federal Reserve raised interest rates in March 2017. It was the third interest rate increase since December 2015, and it appears that there will two additional rate increases in 2017. While interest rate hikes usually indicate a stronger economy, this may not necessarily be the case right now. The Fed's chair has gone on record saying that she only expects moderate growth in coming years.

Our condo association was faced with monumental construction issues thanks to the original developer of our complex. We were cash poor and in no position to get legal representation without a contingency fee arrangement. Luckily for us, Scott Long and Burke Robinson were willing to take us on as clients. Their work ethic, professionalism and knowledge of condominium construction served our association very well. Any association would be well served in hiring these gentlemen to represent them.

Board of Directors - Plaza Gardens on the Lake Condominium Owners’ Association Lake of the Ozarks, MO

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