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Pennsylvania CRE projects may see more high-wealth funding

10/18/2016 | Real Estate Blog

Experts say that commercial real estate, or CRE, has grown increasingly attractive to investors with cash to burn. Individuals with a high net worth are using CRE investing to heighten yields and generate significant amounts of income as opposed to simply trying to maintain their existing capital. Their readiness to invest in markets that other institutions shy away from means that in smaller cities and secondary markets, private investors are becoming important sources of funding.

Individual CRE investors prefer various forms of property, such as facilities that have high cash flows although they charge low rents. Others seem to favor properties where single tenants take out leases over extended time frames.

Some analysts claim that these trends may be spurred on by the fact that bonds and other assets are harder to profit from. The first half of 2016 saw wealthy investors sink some $3.2 billion into acquisitions, which was about $1 billion less than they spent during the same period in 2015 but still higher than 2014 figures. Around 63 percent of investors in the U.S. believe that domestic investment will increase in volume, and sectors like industrial, logistics, central business district offices and shopping centers are predicted to be the most popular.

Investing in commercial real estate or taking part in a transaction can be complicated processes. In addition to thinking about issues like the immediate cost of a given deal, would-be backers and property owners need to consider many legal realities. Zoning laws, survey requirements, environmental regulations and other rules could all affect the profitability of a given project. Before actually signing a deal, it may be useful to speak with a commercial real estate adviser about how these factors will impact one’s obligations and rights.