Certain CRE Sectors Experience a Surge in Value, Even as Others See a Decline

 Posted on December 00, 0000 in Commercial Real Estate

Real estate prices have risen since the recession, for the most part, but many seasoned investors believe that some of the markets are losing steam. The decreased foot traffic in malls, closure of former top businesses, and 10 percent dip in the hard-hit retail sector certainly suggests as much. Yet, even as these areas experience a decline in value, some CRE sectors are experiencing a major surge. Learn more about these niche markets, and discover how a seasoned real estate attorney can help you successfully break into them to further grow and diversify your portfolio.

A Closer Look at CRE Market Trends

At the end of the recession, the Commercial Property Price Index hit an all-time low of 61.2. Since then, the index has more than doubled, and investors have been able to borrow more easily, thanks to low interest rates. Unfortunately, the broad index started to plateau in 2016, hitting and holding right around 126.9. Experts and analysts say this plateau is due, at least in part, to the rising interest rates, which are making it more expensive for investors to finance their purchase. Investor demand is also decreasing, with investors buying $175 billion in U.S. commercial real estate property in the first five months of 2018 (a 2 percent decline from last year).

2017's Top-Performing CRE Sectors

While many of the CRE market sectors experienced a decline in 2017, there are some niche sectors that saw a massive surge in value. These included student housing, manufactured homes, and industrial property. Industry experts say there are specific reasons for the surge in each market: people will always go to college, so there will always be a need for student housing, which saw 10 percent increase in value over the past year; manufactured homes require a low capital cost, and they are supply-constrained due to slows in the permitting process (and they experienced a 10 percent increase in the past year); and warehouses and other industrial buildings are growing in demand (12 percent over the last year), thanks the constant increase in online shopping.

Grow Your Portfolio with Help from Our Naperville Commercial Real Estate Lawyers

CRE investors who strive to stay competitive and constantly grow their portfolio are those that tend to experience the greatest success. Trusted, experienced, and committed to protecting your best interests, Lindell & Tessitore, P.C. can assist you with this process. Schedule your personalized consultation with our Naperville commercial real estate lawyers to get started. Call 630-778-3818 today.

Sources:

https://www.wsj.com/articles/u-s-commercial-property-values-surge-in-niche-sectors-1531825204

https://money.cnn.com/2017/06/02/news/economy/doomed-malls/index.html