A multinational investment firm based in California has predicted that commercial real estate values around the country are set to fall by as much as 5 percent in the coming 12 months. Pacific Investment Management Company made the prediction in a report released on June 20. The firm says that stricter regulations and a wave of maturing debt are fueling a developing storm in the commercial property market.
While no single factor is driving uncertainty in the commercial real estate sector, the investment firm pointed to a number of converging influences that may combine to drive demand and prices down. These influences include a slowing economy in China, persistently low energy prices and uncertainties in the debt markets. These factors look likely to end six years of robust growth in commercial property prices according to the report.
While commercial real estate developers and investors may find the contents of the report troubling, the investment firm points out that savvy buyers could profit from market volatility by snapping up distressed properties at deeply discounted prices. Investors seeking alternative places to put their money could also profit by offering capital to borrowers faced with maturing debt and few refinancing options. The decline in values has already begun in many U.S. cities where prices have dropped by 3 percent in recent months according to a June 6 report co-authored Moody's.
Anticipating future market trends can be crucial for property developers and investors who may put eight-figure sums into projects that can take years to complete. Experienced real estate attorneys may provide assistance by helping to ensure that commercial property developments are not delayed unnecessarily by zoning or land use issues or legal disputes.