Commercial real estate is not looking good at the moment. It’s been on a negative streak for five repeated quarters, a pattern that hasn’t happened since 1992. The result has had an impact on commercial real estate prices, which have tanked from 30-50% off their highs.
This result has left many companies with the deeds holding empty cards. The downfall has almost destroyed any equity on the buildings. Companies are feeling the burn.
It is anticipated that a dominoes effect will occur with all the rising debt financing from real estate deals. A Bloomberg real estate analyst believes that over 54% of the $1.4 trillion in loans will default over the next four years. As a result, many banks will probably close over the loss of financing.
While commercial real estate is a lucrative investment, it is still being impacted by the real estate bust. The good side to it all is that prices are at an all-time low. If one has the cash, then it may be worth it to fork over the money for a quality purchase. However, one should be extremely knowledgeable about the property in question. The bad side is that due to the situation in commercial real estate, one shouldn’t look for a lot of financial backing. Banks aren’t willing to take more risks with real estate right now. A lot of analysts are in agreement that it’s a prime time to buy up real estate if you’re in the position to afford it.
*Image courtesy of Gary Yeowell.
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I am SO glad to be reading this! My hope is to get my first commercial property by 2012. Let them keep going down. Thanks for keeping us informed!
That’s a great plan, Tina. We wish you the best, as commercial real estate is a great asset to have. The tax advantages alone are enticing.
Next week, we’re going to feature the profile of R. Donahue Peebles, owner of the largest African American owned commercial real estate firm. His story is so inspiring. We can all do it!
Thanks for reading! We love inspiring others to pursue their routes to success!
yeah,It is anticipated that a dominoes effect will occur with all the rising debt financing from real estate deal.
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