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Long-term focus eases ups and downs of commercial real estate

On Behalf of | Mar 14, 2018 | Commercial Real Estate

The commercial real estate market in Missouri and nationwide has produced double-digit returns for the last two decades. Although Colliers International’s 2018 Outlook has declared that 2017 was the peak for the commercial property market, investors could still expect moderate returns in the coming years. By keeping an eye on the long term, investors could shield themselves from missteps during market fluctuations.

Market peaks and bottoms are notoriously difficult to recognize before they happen, which means investors should value the long-term potential of commercial real estate. The fact that real estate takes time to sell insulates it somewhat from market crashes. Signs of trouble cannot force investors to sell their assets quickly. This is the opposite of liquid assets like stocks.

As a result, commercial real estate represents an investment with relatively low volatility. Historically, the ups and downs in the markets for stocks and bonds do not translate into immediate problems for real estate. People frequently choose real estate as an investment vehicle when they want to shift assets away from a declining stock market.

Because investors typically hold commercial properties for years, a person preparing to buy commercial real estate may benefit from a legal analysis of the investment prior to making a commitment. If the person is planning any commercial development, an attorney may be able to evaluate issues like zoning, property taxes and environmental regulations. This information might allow the person to make a full accounting of costs before calculating the expected returns on the investment. An attorney may also be able to investigate issues like easements and tax liens applied to a property that could impact the success of a project. After a person decides to go forward with a purchase, an attorney may represent the person’s interests during the development of the purchase agreement.