Is Commercial Real Estate The Main Factor In The Economy?

By
Commercial Real Estate Agent with Tri State Properties BROK.0099563782-ACT

Nothing in the United States seems to demonstrate how well the economy is doing quite as much as Commercial Real Estate. With prices rising almost daily and office construction booming, we are seeing key indicators that the US economy is growing and fast. "Office buildings are the ecosystem in which American business lives,” said Daniel Geiger of Craind's New York Business.

Recently, the CoStar Group who are known for their real estate market statistics, denoted that commercial real estate makes up approximately $12 trillion of the United States economy. A few years back when the financial crisis hit America very hard, the value on commercial properties dropped 25 percent as multiple businesses closed down or left their office space entirely. In the previous year though, we have seen an increase in demand for business offices as the market not to so subtly strengthens. The large cities known for their commercial real estate, New York, Houston, Boston, Minneapolis, Phoenix and Seattle are all rising back from the ashes fast as prices are sky rocketing.

monroe commercial real estateWhat may come as a very shocking statistic to most real estate fans is that our beloved Manhattan has increased their commercial property prices nearly 60 percent over the previous three years, in comparison to the national average of just about 16 percent. "I do not find that at all surprising, nor do I see it as a warning bell,” said Darcy Stacom, a broker in the Manhattan area. "We have a great deal of liquidity in the market because of (global) economies (seemingly) printing money. So if you can buy a great office building or a great apartment house and collect good rents … and get yield, (that’s) driving prices (up)."

Even the large risk takers who purchased trophy towers like the GM Building back at the peak of the real estate market, can now sell off those properties for approximately 20 percent or higher. Some properties are even selling around $1,000 per square foot, a number higher than the height of the market from 2006 to 2008. With the new trends becoming standard real estate practice, developers and investors are eager to jump on this bandwagon as increasing demand will become a very extravagent R.O.I. "Clearly, the low interest rates have only facilitated the rise in values of commercial and residential real estate. If you see an increase in interest rates, it will likely have a strong impact on values," said Geiger.

As the federal reserve starts to taper bonds, we may see a slight decrease in the demand for commercial real estate. As the economy begins to revert back to the days in which properties were highly sought after though, we may not see much of a decrease once the bond tapering begins. Look for a very solid 2014 as the numbers never lie.

 

Posted by

Ryan Roark CCIM, is a licensed commercial real estate broker. If you are interested in commercial properties in Monroe, Louisiana you may contact him at 318-348-5815. His office is located at 1900 N. 18th Street, Suite 319, Monroe, LA. www.MonroeCommercial.com

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Rainmaker
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David Saks
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Fine information. Thanks for sharing. Have a great day ahead.

Feb 07, 2014 04:48 PM #1
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Ryan Roark

CCIM, Commercial Real Estate Monroe LA
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