Major disruptions in the retail sector across Florida and around the country have created changes within the commercial real estate market. Many retailers have either gone out of business or have retreated from brick-and-mortar stores to concentrate on e-commerce efforts. As a result, landlords and property managers are actively seeking new commercial tenants while entrepreneurs are likewise seeking opportunities.
Those who are selling commercial real estate in Florida generally want the deal to close as soon as possible. Those who are prospective buyers want to make sure that they are getting a quality property. Therefore, it isn't uncommon for buyers and sellers to have different ideas as to how the due diligence process should play out. In some cases, buyers may want more time for due diligence because it also buys time to find financing.
Renting out a single-family home may seem like an easy way for Florida residents to make money investing in real estate. However, there are many problems that an investor may encounter. First, the owner of the property has to decide whether to manage it on his or her own or pay someone up to 10 percent of the property's income to look after it.
While the summer months are usually the slowest for Florida commercial real estate transactions, this season has been different. In the past few months, sales and leases were strong across the country, according to a survey of brokers.
Prospective buyers of Florida commercial real estate may run into some common problems with getting their transactions approved by prospective lenders. People should be aware of these issues and take the time to fix them in advance.
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.
Figures from the financial sector reveal that banks in Florida and around the country have been making fewer loans since the U.S. Federal Reserve started inching interest rates upward in December, but the commercial property sector has so far been able to avoid this trend. However, experts say that this is likely due to the nature of commercial real estate loans and not a reflection of the overall strength of the property market.
Florida residents may know that real estate investment has slowed to a crawl in many parts of the country. This is true even as a real estate developer was elected president in November 2016. In New York City, sales fell to $4.3 billion, which is a 58 percent decrease from the same period in 2016. Sales dropped by 18 percent overall in the United States during that time period.
Real estate investors in Florida and around the country often begin by purchasing single-family residences, but many of them soon switch their focus to commercial properties like stores, offices, restaurants and warehouses. Commercial real estate generally provides higher yields, has less demanding tenants and is not as risky as residential property speculation. For landlords, the difference between commercial and residential property investing can be significant.
Some Florida commercial real estate investors and developers might wonder how the rise in interest rates will affect the industry. The answer is somewhat mixed. Borrowing money becomes more expensive when interest rates rise, so this suggests that there could be a slowdown in the market. On the other hand, rising interest rates go hand-in-hand with a healthy economy, and a healthy economy overall could be good news for commercial real estate. In general, business leaders are optimistic about the economy although the Federal Reserve anticipates modest economic growth in the years ahead.