Commercial real estate investments in California and across the country may bring investors substantial returns during 2017. Despite post-recession high prices for property and the rise in interest rates, commercial properties are appreciating, even passing their 2008 peak, according to market analyst reports. Many advisers also believe that, because of market fundamentals, commercial real estate investments will continue to be a reliable way for investors to build wealth for years to come.
Two important factors contributing to rising commercial values are the robust economy and strong job growth. According to the Bureau of Economic Analysis, real GDP gained 2.9 percent during the third quarter of 2016. Job growth has caused rents to rise and vacancy rates to drop. As a result, the demand for multifamily complexes and apartments could rise, as more new workers look for a place to live.
Another reason for investing in commercial real estate is these types of properties are selling well. According to reports, roughly $139 billion in value of commercial real estate sales occurred in the first half of 2016. For example, Los Angeles, New York and other gateway cities saw the highest commercial real estate sales volumes. However, the highest growth rates transpired in secondary markets.
While investing in commercial real estate may be lucrative, these types of transactions can be quite complex. For this reason, many commercial property investors rely on an experienced attorney for assistance in reviewing the purchase agreement and other documents in order to ensure that there are no provisions which could be problematic in the future.
Source: The Huffington Post, “8 Reasons Why Commercial Real Estate Investing Still Pays”, Michael Episcope, Dec. 8, 2016