Due to the improvement in the American economy, many investors have chosen to fund the purchase of the commercial real estate properties. The commercial real estate is any property that is not used for residential purpose. Some of the examples of commercial properties are shopping malls, IT parks and others. Any property built and developed to host a commercial activity can be grouped under ‘commercial real estate’.
The experts say that there are billions of dollars in the loop, waiting to go to fund an economically viable and profitable business. Funding can be sourced through private equity funds, pension funds, life insurance companies, REITA and other sources and it can be used for the purchase of commercial real estate properties. Even banks have relaxed their underwriting criteria, so that more amount of capital is available in the market.
Reason for the hike in the investment activity in commercial real estate
The first and the foremost reason that the investors are very much motivated to invest in this market is that the yield is expected to be high. In a few years, the real estate has moved from ‘out of favor asset’ to ‘in favor asset’. People always look for something to invest which has a very less risk involved in it. In the risk and return threshold, any asset that has high return and very less risk involved in it is considered to be a very perfect solution for investing. The results of the stock and bond market are highly unpredictable. The bonds that were considered to be safe suddenly became undesirable, due to the economic condition.
In this uncertain global economy, the high probability of turbulence in the bonds and stock markets has made the real estate, a better option for the people to invest with very little risk. They can surely expect high yield or return, in the future. The solid income in the future and the less risk factor involved has made the domestic and the commercial real estate, more attractive in the eyes of the investors.
Forecast for commercial real estate and the elements involved in it
All the investment results in the coming days of 2013 would be positive news for anyone who is planning to be a part of the commercial real estate property arena. The supply and demand game in the commercial real estate market is a complex and is always fluctuating. The demand and the supply are negatively co-related. When the supply decreases, the demand increases. Thus, the rents spikes out and people look out for new construction opportunities. This type of market growth fuels the practitioners, who are very specialized in this industry.
May it be a broker or an investment manager, the number of commercial deals for real estate in this year is forecasted to be very high. This high growth in the investment activities in this industry would lead to more opportunities and commissions for all the elements in this industry. With more number of funds available for the industry, the brokers and the investment managers would experience a high fee for the processes, the number of jobs related to this industry increases and moreover, the output of this industry would increase providing high yield for the investors.
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