Commercial property developers in California may now be thinking twice before starting projects that would have been carried out without hesitation a few years ago. Potentially huge changes on the horizon, including tax reform and inflation, are uncertain and likely to have serious implications in the debt-heavy world of commercial real estate financing. A look at the market in New York offers insights into why some investors are moving ahead despite the uncertainty and others are choosing to forego profits and play it safe.
Brokerage data showed a Q1 2017 drop of 58 percent in sales compared to the same quarter last year. When averaged across the nation, property sales experienced a drop of 18 percent. One real estate advisor suggests that the frenzied pace of overbuilding during the past six years of bull mania in major markets has caused commercial property developers to pause and wonder how long this could continue. Other investors claim the slowdown is more about concerns over whether President Trump's tax reforms will fail to pass Congress.