According to Green Street Advisors, commercial property prices are likely to remain stable for the next several months. Furthermore, as the Federal Reserve raises interest rates, there could be a flip in the yield curve, which may signal weaker economic conditions ahead. Data from Real Capital Analytics (RCA) found that year-over-year price growth as of July 2018 was half of what it was in the early part of 2015.
However, it is important to note that price growth was partially dependent on the type of property a person owned. For instance, student housing and manufactured homes were doing better than strip or regional malls. The multifamily sector posted yearly growth of 12 percent according to RCA's CPPI. Over the next several months, it is believed that there will be money available for those looking to get into the commercial real estate sector. Furthermore, it is expected that debt will be relatively inexpensive to acquire.
Green Street believes that the office sector may be the least favorable portion of the commercial real estate industry to invest in. This is because landlords need to reinvest a lot of the money that they make back into their properties to keep them appealing for tenants. Those who own apartment or office buildings should also be aware that supply is meeting demand, which may impact rental rates going forward.
Those who are looking to buy commercial property are typically looking to make a profit on a monthly or yearly basis. Therefore, it is generally a good idea to research an investment opportunity before committing to it. An attorney can often perform due diligence by making sure that there are no title or zoning problems.