The price tag of commercial property in the US, including in Southern California, has been on the rise in recent years. However, the price might be leveling off now in commercial real estate transactions. In fact, the price of commercial real estate is predicted to possibly even decline in the next few years.
Part of the reason for the dropping commercial real estate prices is a financial environment that is less favorable today than it has been in the past. In addition, demand is dropping, while the supply appears to be increasing. A crash is not expected; rather, a long period of down or sideways prices is expected.
Specifically, the years of 2018 to 2020 are expected to slow down price wise. However, some researchers do not think the real estate market in California will soften over the next few years. They instead expect many more years of growth in the future, particularly in Los Angeles, where the local economy is more diversified than it was during the most recent recession.
Now appears to be an ideal time to sell commercial real estate properties before prices drop. Likewise, now might be a perfect time to purchase real estate properties before prices potentially go up due to continued market growth in the state of California. In either situation, navigating the real estate transaction process can be overwhelming and intimidating. Proper legal guidance may help buyers and sellers of commercial properties to complete even the most complex commercial real estate transactions in an effort to accomplish their specific goals in the real estate market.
Source: scpr.com, “Is the commercial real estate bubble about to pop?“, Ben Bergman, June 10, 2016