Commercial Real Estate News Wrap Up From Liberty SBF

November 8, 2016

U.S commercial real estate prices have reached new highs, but the sector is a much safer place today than it was before the 2008 financial crisis. According to a recent article by Rani Molla of Bloomberg Gadfly, recent trends within commercial real estate that point to a recession have been offset by other factors within the market. Low capitalization rates have been offset by increasing spreads within 10 year Treasury rates, which have lowered the cost of borrowing greatly. Furthermore, over 30% of senior loan officers have reported tightening standards on loans at their banks, thus avoiding many of the risky practices that helped cause the last real estate crash.

Andrew Nelson, chief economist of Colliers International, recently sat down with the San Diego Union-Tribune to discuss real estate trends to look for in 2017. Mr. Nelson highlighted the positive impact of globalization, stating, “there isn’t any doubt that it’s been a positive force for economic growth and U.S economic growth as a whole.” In terms of real estate, Mr. Nelson said to look out for the growth of urban centers for the office market, entertainment centers and destination shopping for the retail market, the increasing role of institutional investors within the real estate market, and the increasing millennial market share within the multifamily market.

Researchers have found that the Brexit’s impact on US real estate has been minimal at best. At first, many economists and analysts speculated that investors would look to US properties as a safe haven for investment, but a Trepp report has found little impact on US real estate so far. Susan Person, senior director of research, in an interview with Bisnow, stated, “[We] basically determined that the data is not yet showing an impact … though we do think more foreign investments will eventually be driven to this country due to the Brexit vote.” She followed up by stating, “It might just be that even after two months it is jut too soon to determine. There has been a lot of discussion and worries about this, and it was overblown.”

8 + 1 (That’s 9) Things You Need To Know About CRE Right Now!