Commercial property values are down

On Behalf of | Jun 20, 2017 | commercial real estate

Consumers in Florida and around the country are doing more of their spending online, and many of the nation’s biggest brick-and-mortar retailers are struggling to keep their doors open as a result. The commercial real estate market reflects the economy as a whole, and demand for warehouse space is strong while malls across the country are closing. A sluggish retail sector has not helped, and the Federal Reserve has taken action in recent months partly to curb real estate speculation.

The financial sector currently holds more than $3.8 trillion in commercial real estate loans, and more than half of this debt is held by the nation’s banks. Reports suggest that American banks with less than $50 billion in assets are particularly vulnerable, and experts say that loans could become more difficult for developers to obtain as risks are balanced and portfolios trimmed.

The actions taken by the Federal Reserve appear to be have cooled the commercial property market. Figures for the first four months of 2017 reveal that the number of commercial real estate transactions was down by 17 percent year-over-year and has fallen by almost a third since the comparable period in 2015. Data from the real estate information company Real Capital Analytics indicates that developers hoping to fund projects worth more than $500 million have had an especially difficult time. The figures reveal that deal volume for large transactions during the first quarter of 2017 was down by an alarming 44 percent from its 2015 peak.

Commercial property transactions are often complex, and legal challenges like zoning disputes or environmental survey issues can become thorny and difficult to resolve when several parties are involved. Attorneys with experience in this area may help developers to avoid protracted litigation by addressing regulatory matters promptly and ensuring that all of the necessary permits have been secured.