The decline of oil pump prices began with the sharp plunge in June 2014 from $107 per barrel to $26 per barrel in February 2016, a 22-year low. In January 2017, prices at the pump reached a low of $2.05 nationwide. Commercial real estate investors in Missouri may benefit from learning that the decrease in oil prices has negatively impacted the markets that benefit from this industry, including the commercial real estate market.
While motorists may enjoy the low oil prices, it resulted in the energy industry laying off 350,000 workers globally. Out of those workers, 217,000 were in the United States, according to a study by the University of Houston. The Canadian Association of Petroleum Producers reports that 44,000 Canadian energy workers have lost their jobs during the past two years.
The fall of energy prices and the subsequent massive layoffs has affected the number of hotel stays and financial market related to the oil industry in cities where the cutbacks occurred. In states that depend heavily on oil, there are also industrial vacancies.
The office sectors in Houston, Texas, and Calgary, Canada, were the most negatively affected. Houston has almost 11 million square feet of vacant office space while the figure in Edmonton, Canada, is nearly 6 million square feet.
This increase in the amount of vacant commercial real estate comes at a time when new office space is being delivered while demand has significantly dwindled. The construction of many of these properties began during the oil boom that was going on before 2015.
An attorney who is experienced in commercial real estate law may advise someone who wants to invest in a commercial property. Lawyers can protect their client’s interests during contract negotiations, manage real estate closings, identify and resolve zoning laws or draft purchase agreements.