Some commercial real estate markets may be approaching oversupply
9/26/2016 | Real Estate Blog
Pennsylvania investors might look to current real estate trends to determine whether there are certain areas that may be approaching oversupply. This can indicate that some markets have become overbuilt due to continued expansion in certain locations.
One area of interest would be office construction. During the first half of 2016, deliveries on this type of construction equaled 24.3 million square feet, and reports indicate that there is another 98.9 million square feet that is currently under construction. Some market leaders are concerned that there may be overbuilding in New York City, Dallas and Houston. San Francisco was also showing signs of overbuilding. However, recent advances in the tech and life-science markets have increased demand.
Another important commercial real estate sector to consider is retail. There were 9.5 million square feet of building completions by June 2016 and another 24.6 million square feet still under construction at this same point in time. Concerns regarding this investment option are based more on store closings and limited demand rather that on overbuilding itself. One area that did show warning signs of potential overbuilding is hotels where supply is expected to exceed demand in 2017. This would be the first time this has occurred since 2009. Markets that showed more than 5,000 rooms currently being built include Dallas, Houston, Los Angeles and New York.
Individuals who would like to invest in commercial real estate may decide to contact a real estate attorney. He or she may be able to help evaluate potential real estate deals and provide assistance with the due diligence process. This assessment may help the investor make a more prudent investment decision.