Survey Reveals CRE Market's Biggest Concerns in 2018
The risk that an investor assumes during commercial real estate transactions can be largely attributed to the industry's volatile nature. However, there are additional factors at play as well. In fact, the third annual Real Estate Market Sentiment Survey revealed that there are two main issues concerning real estate executives for the year 2018: rising interest rates, and supply and demand. Learn more about these concerns in the following sections, including how an experienced commercial real estate attorney can help you to mitigate the risks that you could face in your next commercial real estate project.
CRE's Rising Interest Rates
Rising interest rates within the CRE market have been a concern for some time now, which is why most savvy investors and executives have taken steps to prepare for the inevitable. Unfortunately, preparation can only take a person so far – especially if interest rates exceed the market's “pain threshold,” the rate at which investors and executives are likely to be adversely affected. Industry experts say this threshold falls at about 150 basis points, and that the market could far exceed it in 2018, which has many investors concerned. Thankfully, there are some smart investment moves that industry executives can use to grow and expand their portfolio, even in the face of rising interest rates.
CRE's Growth Cycle (Supply and Demand)
Real estate is a unique market in terms of growth. It doesn’t typically spike like other for-profit sectors. Instead, it flexes, with sometimes significant drops and rises in supply and demand. Some executives are concerned that supply and demand may wane in the upcoming year, but the passage of the Tax Cuts and Jobs Act of 2017 could extend the market's current growth cycle. In fact, some experts are saying that the industry may continue to see growth, all the way into 2020.
Mitigating the CRE Industry's Risks
Business always comes with risks, but those within the CRE industry are unique. When paired with the insurmountable risks that investors and executives sometimes assume in their projects, the importance of obtaining experienced and tailored legal assistance becomes clear.
Do not take risks with your next commercial real estate project. Contact Lindell & Tessitore, P.C. instead. Seasoned and experienced, our Naperville commercial real estate lawyers can examine your next prospect, advise you of the potential risks, and guide you in making sound investment decisions for the future. Schedule your personalized consultation to get started. Call 630-778-3818 today.