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Commercial real estate prices may be dropping

6/25/2016 | Real Estate Blog

Some Pennsylvania commercial real estate investors may be aware that there are predictions that prices may fall up to 5 percent in the year ahead. This was the prediction of a report released on May 20 by the Pacific Investment Management Co. The prediction comes after six years of rising prices.

According to the report, several factors are to blame. These include tighter regulations, lower global demand for U.S. property, a decrease in oil prices and changes in debt markets among others. The report went on to say that the volatility in the market could result in investment opportunities for buyers who may be able to purchase properties at low prices. Investors may also have the opportunity to fund borrowers who cannot pay off maturing debt.

There have been signs since January that the real estate market was due to slow down. Property values in big U.S. cities, where the boom has been strongest, went down 3 percent in the last three months. There are predictions that New York markets will see as much as a 30 percent decline.

At a time like this, commercial real estate may look like an attractive investment to both novice and longtime real estate investors. Commercial real estate investment can present some complex issues, and even those who have experience in this area may want to have the assistance of an attorney. Investing in real estate may go beyond buying and selling and involve leasing space to businesses, developing property, dealing with environmental issues from the previous owner, contractual disputes and more. Furthermore, working with an attorney at the start of the purchasing process may help cultivate a relationship with a professional who may be on hand as other issues arise during ownership.