It’s no secret that the real estate industry has been under heavy fire in recent years. Mention “real estate,” and most investors run for the hills. In the past, this was a intelligent choice. However, is important in any type of investing to understand industry landscapes.
There are always pockets of growth, ripe with valuable investment opportunities. Right now that pocket in the real estate market is investing in commercial real estate.
Commercial real estate comprises land, property and building devoted to commercial use. If a business is on a property, than it is considered commercial real estate. These include office spaces, retail centers, factory sites, etc.
The question you’re asking is probably, why invest in commercial real estate? More importantly, why is the right time?
The U.S. economy is projected to deliver is strongest year of growth in 2015, following the recent financial crisis. The labor market is reaching a healthy level and corporate expenditures are increasing. This current economic environment provides an excellent landscape for investors to take their funds and put them into commercial real estate investing.
Vacancy rates in office, industrial and retail sectors are all expected to decline in the fourth quarter of 2015. Office vacancy rates are currently 15.7% and expected to drop to 15.6%. Industrial vacancy rates are predicted to fall from 8.8% to 8.4% in the fourth quarter. And vacancies in the retail market are projected to fall from a current rate of 9.7% to 9.5% by the end of the year.
So what do all those figures actually mean?
It is important to note that vacancy rates are DECLINING. That shows the real estate market is recovering, because more people are buying up spaces. The activity demonstrates a growing demand for commercial real estate in all areas.
Along with a growing demand for commercial space, commercial real estate loans are about to become a lot more attractive. Between 2014 and 2017, an estimated $1.4 trillion worth of commercial mortgage loans will mature. That mean those loans will be paid off in full. Previous developers and investors will be looking to reinvest. With so many loans paid off, commercial real estate brokers and other lenders will be looking for ways to lower mortgage rates and make buying commercial real estate an attractive prospect.
So, it is important to start investing in commercial real estate at the right time. Commercial real estate loans have already begun to fall significantly. Current interest range from 3.5% for 5-year terms to 4.5% for a 20-year loan. Buying commercial real estate now would ensure low loan rates and high demand for commercial spaces before others come in and flood the market, lessening potential return on investments.
If you’re looking for a way to take advantage of the recovering economy, consider investing in commercial real estate now. It’s an ideal time to jump in as the market is heating up.