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Political uncertainty may be cause of CRE slowdown

On Behalf of | May 22, 2017 | Uncategorized

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.

Reports indicate that even some of New York’s most admired and respected developers are having trouble obtaining the cash they need to keep their projects on track or break ground on new ventures. A frantic construction boom that lasted for six years has raised concerns about overbuilding in some of the nation’s largest commercial property markets, and these fears have made lenders more cautious and traditional financing packages difficult to obtain.

Some industry analysts believe that political uncertainty played a role in the recent commercial real estate sales slump. Many in the business community were buoyed when Donald Trump prevailed in November, but doubts have started to set in about his ability to deliver on his promises to cut taxes and slash regulations. Other executives fear that inflation and interest rates will rise if Trump does manage to push his legislative platform through Congress. This is an especially pressing concern for debt-reliant sectors like real estate.

Attorneys with experience in complex commercial real estate transactions may help developers to protect themselves from unexpected market fluctuations by working to ensure that their projects are completed on time. Attorneys could seek to prevent common legal issues like land use or zoning disputes causing unnecessary and costly delays, and they could also endeavor to settle contract disputes through negotiation to avoid protracted court battles.