Investors in California might have heard about the recent decline in the commercial real estate market. Large commercial property companies like Jones Lang LaSalle Inc. and CBRE Group Inc. have been experiencing their greatest decrease in transactions since 2011, according to CBRE Group Inc. Some brokerage firms are worried that profits could decline, and this could cause firms to begin leasing properties rather than selling them.
The decrease in real estate transactions follows a period of strong growth. Real Capital Analytic Inc. said that commercial real estate transactions increased by 23 percent during the second quarter of 2014. Some of the major real estate transactions last year included the sales of Willis Tower in Chicago and Waldorf Astoria Hotels in New York.
A chief economist for Chandan Economics said that the growth rate could not continue to rise the way that it did during 2014. He said that real estate transactions have started to slow down as they were expected to. Data from the Federal Reserve shows that real estate lending is slowing down in 2015 after rising in 2013 and 2014. One of the factors that contributed to the decline in U.S. commercial real estate transactions is the strengthening dollar and its effect on non-U.S. profit. Also, the decrease in oil prices has brought down the demand for real estate in 'energy hubs."
Many different factors can influence the real estate market, and a prospective investor may want to discuss them with an attorney before going forward with a real estate transaction. An attorney may also be able to help an investor with real estate litigation like lease disputes or issues with an easement.
Source: Realty Today, "Commercial Real Estate Property Brokers Experience Profit Drop as Market Slows Down," Aug. 25, 2015
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