Profits decreasing for commercial real estate sales

Kansas investors who are interested in commercial real estate may be interested to learn that multiple major companies experienced significant decreases in their commercial real estate property sales profits in the month of August. Reportedly, the commercial real estate market is slowing down from its previous explosive growth that has been occurring since 2011.

Bloomberg reported that large commercial property brokers around the country experienced significant decreases in profits for the month as compared to their numbers for the same period in 2011. Jones Lang LaSalle Inc. reported a loss of 16 percent, while CBRE Group Inc. lost 14 percent. Marcus & Millichap Inc. experienced a drop of 17 percent, while HFF Inc. dropped by 20 percent.

Experts believe that the slowed market indicates that the real estate cycle is in a more mature stage. Large brokers may react by choosing to lease their properties instead of selling them. Among the factors that are believed to have caused the slowing market are a stronger U.S. dollar, lower gas and oil prices and a reduced need for expansion of companies in energy centers like Houston.

Companies that are involved in commercial development may want to speak with their attorneys regarding the current market for commercial real estate in Kansas. An attorney may be able to conduct a market analysis in order to advise a client whether or not a prospective project is a good idea at this time. For property brokers who are trying to determine whether or not to sell a building, an attorney may advise them whether they can expect a good price or if they should instead wait and lease the commercial property instead.

Source: Realty Today, “Commercial Real Estate Property Brokers Experience Profit Drop as Market Slows Down,” Aug. 25, 2015.

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