NAR cautiously optimistic about commercial real estate in 2016

The commercial real estate market in Illinois and around the country will see moderate growth and stable prices in 2016, according to an economist with the National Association of Realtors. The prices of property like retail stores, office space and warehouses have risen sharply in recent years as the economy improved following the 2008 financial crisis and ensuing recession, but falling vacancy rates are expected to tail off as the market continues to stabilize.

In a Nov. 24 press release, the NAR said that a robust job market and improving credit situation would fuel continued improvements in the commercial real estate market. However, it also pointed out that lending criteria remains tight in many parts of the country and prices are likely to decline in some areas if the Federal Reserve raise interest rates in 2016 as expected. The NAR has approximately 70,000 members with backgrounds in commercial real estate development, management and sales.

Commercial property values saw modest setbacks in the third quarter of 2015, which the NAR press release put down to volatility in global financial markets and setback in American exports caused by an increasingly strong dollar. The press release also said that increases in the value of multifamily housing developments, which have been among the sector's most robust performers, are likely to slow in 2016 as supply catches up with demand.

Commercial real estate sellers, buyers and developers face inherent risks, but an attorney with experience in this area may be able to suggest a proactive strategy that allows them to avoid many of the most common pitfalls associated with this type of investment. Complex legal issues that can stop a project in its tracks such as zoning or permit disputes may be anticipated and averted, and potentially contentious provisions in important documents could be identified and rewritten.

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