Law Office of Ryan S. Shipp, PLLC

CRE market data sends mixed signals to investors

Real estate investors in Florida and around the country have become more cautious in recent months as soaring prices have prompted many industry experts to predict that commercial property values are nearing their peak. Reports of a developing asset bubble remind many investors of the losses they suffered during the 2008 financial crisis. However, these concerns were not enough to prevent the Moody's/RCA Commercial Property Price Index from reaching a new high in April.

According to the CPPI data, commercial real estate values rose by 7 percent between April 2016 and April 2017. However, it is figures like these that give many investors pause. Market corrections often follow times of great exuberance, and reports suggest that many investors are taking a more conservative approach because they believe that prices will soon start to fall.

These concerns are reflected by a modest 1 percent year-over-year uptick in the Green Street Commercial Property Price Index, which tracks the value of real estate investment trust portfolios. Green Street Advisors report that these values actually fell slightly during the first four months of 2017. A recent survey conducted in Virginia reveals that investor confidence is waning. More than half of the respondents felt optimistic about the future when the poll was taken in 2016, but that figure dropped to 31 percent when the same questions were asked in 2017.

Attorneys who have been involved in complex commercial real estate negotiations may seek to protect their clients from unpredictable market trends by making efforts to complete their transactions quickly. In addition, lawyers could also help real estate developers avoid costly delays by acting quickly to resolve land use, zoning, permit and environmental disputes.

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