Commercial Real Estate Remains A Stable Investment


Photo Credit: First Capital Advisors


Wondering what the future of commercial real estate holds? The NAR commercial real estate forecast is a great indicator. Despite a tumultuous world economy, commercial real estate is strong. Florida Realtors recently discussed the forecast in an article titled, NAR Forecast: Commercial Real Estate Expansion.

“Ongoing overseas weakness and the slowdown in business investment despite historically low interest rates held second quarter growth at a tepid and disappointing pace,” Yun says. “Only steady job creation, solid consumer spending and residential construction – albeit not enough of it – kept the economy afloat during the first half of the year.”

As the job market strengthens, demand for commercial space grows. However, tightening credit standards prove to be a challenge.

“Any further tightening in credit standards, which never fully normalized after the recession, would inflict the most pressure on the small and mid-sized businesses that mostly look to community banks and credit unions for commercial property financing,” adds Yun. “Not having the necessary access to capital could keep a lid on building and leasing activity and, in turn, keep the economy from getting closer to its long-term average of 3 percent growth.”

Real estate has been a popular investment. So, supply lessened. Yun said that many of these investments are expected to remain strong.

“While inventory constraints and strong appreciation in apartment and retail properties pushed up prices in large commercial markets last quarter, overall sales volume was still down as investors looked for better deals and higher yields in smaller cities,” says Yun. “As a result, investments and leasing activity in middle-tier and smaller markets led the way and are expected to maintain their momentum in coming months.”

Overall, the NAR report and Yun are optimistic for a strong future of commercial real estate.

“The U.S. economy has its flaws and has been stuck in slow-growth mode ever since the Great Recession,” says Yun. “However, it’s still the top performing economy in the world, and U.S. commercial real estate should continue to remain a stable investment and attractive option for investors even as rates move upward.”

If you are positively influenced by this NAR commercial real estate forecast and are interested in investing in a piece of commercial real estate in Miami, please contact me today!

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