Experts predict steady CRE growth in 2017
Commercial real estate investors in Florida and around the country can expect steady growth in the year ahead according to the National Association of Realtors. The trade association’s first quarter outlook suggests that falling demand in larger cities was compensated for by increased activity in smaller markets during the fourth quarter of 2016. Economists expect the U.S. economy to grow by 2.4 percent in 2017, and the NAR believes that this will cause vacancy rates in most commercial property segments to decline.
The competition for industrial space is expected to be fierce in 2017, and vacancy rates in the sector could fall by 130 basis points to about 7 percent according to the NAR. The group says that office vacancies will decline by 110 basis points to 12.1 percent, and landlords in the struggling retail sector may have reason to smile in the year ahead. The number of retail vacancies will fall to 11.2 percent if the NAR’s predictions prove correct, and even the overbuilt multi-family sector will manage to hold steady according to the organization
Some financial experts believe that the current cycle may be nearing its peak and commercial real estate values may be too high, but the National Association of Real Estate Investment Trusts believes that strong fundamentals will fuel increased demand for leases throughout 2017. While year-over-year commercial property prices were up by 8.5 percent in February 2017, the Ten-X CRE Nowcast pricing model predicts more modest gains as the year wears on.
Taking advantage of market opportunities sometimes involves changing how buildings are used. Converting vacant properties into warehouse or manufacturing spaces can sometimes be lucrative, but overcoming zoning, permit and land use hurdles is not always straightforward. Attorneys with experience in this area may be familiar with the challenges involved, and they could help developers and landlords to complete their conversion projects quickly and avoid common pitfalls.