In 1978, California voters passed a ballot measure that caps property taxes at 1 percent of the property's original purchase price and limits increases to 2 percent per year. Proposition 13 applies to both residential and commercial properties, but a new ballot initiative would change the state's constitution to tax industrial properties, commercial real estate and land that will not be used for residential development based on their current market values.
California residents or others who own commercial real estate may get a tax break under the proposed GOP tax bill. Those who hold property in pass-through entities may receive a 20 percent tax reduction if they make less than $157,500 per year. If a couple files jointly, that limit is increased to $315,000. There are also provisions to help private firms with large holdings that may make too much to qualify for the deduction.
Stakeholders in the California commercial real estate market might be interested in learning that Orange County has enjoyed the highest national growth in office rentals over the last two years. Much of the growth in office rentals has resulted from the drive of tech companies to find spaces in submarkets.
Commercial real estate investors in California and around the country can expect returns to remain steady in the months ahead, according to a recent report from NAI Global. The brokerage firm made the prediction after studying industrial, office and retail vacancy rates and rents in 21 key markets. Based on the report, vacancy rates are already at or near 10- or 20-year lows. The resulting shortage of space has pushed rents higher in most parts of the country.
For commercial real estate investors in California who are considering properties to buy, due diligence is an important part of the process. It allows prospective buyers to make sure that that the property in question will be a wise investment for them.
California commercial property owners and developers may be interested in a forecast by the National Association of Realtors. According to the trade association, commercial real estate is expected to be strong in the coming months.
August is usually the slowest month of the year for commercial real estate transactions in California and around the country. This August has been different, however. So far, the summer as a whole has been very busy for commercial real estate and has enjoyed more brisk sales than those of previous years.
Many investors have used real estate to build fortunes in California, but financing a real estate opportunity can be challenging. From a banker's perspective, the aspirations an investor might have for a property mean little compared to the financial nuts and bolts of building the deal.
While the commercial property market in California and around the country has performed well overall in recent years, the retail sector continues to struggle to cope with the nation's evolving shopping habits. The popularity of online operations like Amazon has prompted several prominent brick-and-mortar retailers to file for bankruptcy over the last few years, and abandoned malls and deserted big-box stores are becoming familiar sights on the American landscape. However, the consumer shift toward online buying has created a new and thriving commercial property segment in certain strategically placed communities.
California commercial real estate developers have likely heard about a looming tranche of commercial mortgage-backed securities that must be paid off or refinanced in 2017. About $2.4 billion of these loans became delinquent in June, and experts believe that this may have prompted the delinquency rate on secured commercial property loans to surge by 28 basis points to 5.75 percent. The increase marks the biggest increase in five years on a month-over-month basis. The delinquency rate stood at 4.6 percent at the end of June 2016.