Construction of commercial real estate in California can be a good thing when there is a lot of demand for new units. However, too much building in a particular real estate sector can lead to oversupply. When a commercial real estate sector has more empty units than it has willing buyers and renters, the situation can be bad for the whole sector.
Popular CRE markets around the country
For many years, U.S. commercial real estate investors focused their interests on major cities like New York, Los Angeles and San Francisco, but the tides are starting to change. They are moving away from major cities and metropolitan locations in favor of mid-size cities like San Jose, Miami and Dallas.
Experts say equity REITs will thrive in new sector
Real estate investors in California and throughout the country may be poised for a change as equity real estate investment trusts are moving into a separate real estate sector rather than being lumped in with the financials sector. This move does not apply to mortgage REITs. Already a higher-risk investment, mortgage REITs may continue to be riskier than equity REITs in part because the latter will no longer be tied to the performance of the more volatile financials sector.
