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Recovery in the commercial real estate market

On Behalf of | May 9, 2016 | Commercial Real Estate |

California real estate investors have probably heard the word ‘recovery” many times since 2008. Commercial real estate analysts have spoke often about the market’s recovery over the last eight years, and some are now saying that the commercial real estate market has finally recovered. Though the market has been turbulent since the recession, the overall growth has been strong.

Recoveries in the commercial real estate market vary greatly by sector. Residential apartments recovered before other commercial real estate sectors when they hit all-time high occupancy and rent rates in 2011. Industrial properties took a little longer to recover and just reached peak rent rates in 2015.

Commercial real estate sectors that haven’t fared as well as others include office and retail space. Office space vacancy rates are still at all-time highs, and rental prices for retail stores are not much higher than they were in 2008. However, general data about these two sectors can be a little misleading. Office space in central business districts has had very positive growth while office space in suburban areas has not. Retail stores in metropolitan areas are strong while retail stores in other areas are still struggling.

A commercial real estate investor may benefit from gaining an understanding of the growth patterns of different real estate sectors. There could be opportunities to profit in a particular real estate sector if an investor buys in at the right time. Before purchasing a piece of commercial property, an investor may want to meet with a lawyer in order to determine if there are any title issues or zoning problems that could prove to be an impediment.