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How global trends affect commercial real estate

On Behalf of | Oct 4, 2016 | Commercial Real Estate

Commercial real estate investors in Missouri might consider looking to economic and political trends on a global and national scale to gauge the health of the commercial real estate market. For example, the United States is an attractive market for foreign investors because of widespread instability elsewhere. In the United Kingdom, the uncertainty raised by Brexit has caused investors who might have bought real estate there to look toward the U.S. as well. Furthermore, the commercial real estate market in the U.S. is renowned for transparency and high yields.

However, new supply is low, and that is expected to continue. Lenders are hesitant to fund new construction, particularly in the hotel and hospitality industries, and multifamily housing is the only sector that is near long-term highs. Low cap rates and low interest rates are also a factor. Low cap rates show no sign of a big increase although they may move up slowly while interest rates may only show a marginal increase for the rest of the year.

Oversupply of oil has led to volatility in the energy market, and this has hurt economies in places like North Dakota and Houston where the oil industry is critical to the economy. However, in other parts of the country, lower gas prices have been a positive, and it is predicted that these lower prices could lead to more disposable income and a stronger economy.

First-time investors as well as experienced ones might want to work with an attorney. The processes of purchasing, selling and development as well as ownership may all raise a number of complex legal issues. For example, a person may need to observe laws around land use, zoning and environmental cleanup. A refinance may be necessary, or there may be a lien on a property, a contract dispute or another issue that requires legal guidance.