Commercial real estate investors in Missouri are watching the real estate market, waiting to see whether or not Brexit will have an effect and what it might be. Industry experts say there are several key factors at play.
Rules concerning the financing of high volatility commercial real estate have made it harder for developers to secure funding for new developments. Similarly, commercial mortgage-backed securities are becoming more difficult to obtain because of risk retention rules that are scheduled to go into effect later in the year. It has also become increasingly difficult to secure funding for properties in tertiary markets.
For 2016, full-year returns are expected to average 8.4 percent. The returns are expected to decrease in 2017 and 2018 to 6.8 and 5.7 percent, respectively. Prices are currently stable, and experts state that the commercial real estate market is currently in a plateau. In July, the Federal Reserve stated that it might raise the interest rates later in 2016, but it is leaving them where they are at for the time being. Investors have reacted by showing more interest in core properties as opposed to new developments as they wait to see what will happen.
Developers may want to meet with their attorneys to discuss potential financing sources for their commercial property projects. Because federal banking regulators are starting to pay close scrutiny to commercial lending practices, developers may be finding it harder to obtain financing, depending upon the nature of a particular project, the type of property and its location. An attorney might recommend seeking funding from alternative sources.