Blue Aisle Special: Commercial Real Estate

If you are an investor who is looking for a great bargain, you might want to set your sights upon commercial real estate. According to experts, an increasing number of investors are deciding to move their capital into real estate. Furthermore, they expect this trend to continue over the next couple of years as the economy continues to take its toll on the commercial real estate sector.

“A lot of the investors I’m hearing about are now thinking of shifting their focus to real estate, because that’s where they see the opportunities,: said Mark Shapiro, who is the head of global restructuring and finance and Barclays, while speaking in New York at the Reuters Restructuring Summit. “That’s probably where you’re going to see capital shifting.”

Although most experts agree that the residential real estate market has likely hit bottom at this point, the commercial real estate market has not quite hit this point yet. Rather, many developers and property owners believe the majority of commercial real estate defaults will occur over the next few years as banks become increasingly less willing to provide new financing and to roll over their debts. Understandably, policymakers are concerned by the implications of a commercial real estate meltdown.

“Commercial real estate remains a very serious problem,” said Ben Bernanke, who is the Federal Reserve Chairman, while addressing the House Financial Services Committee recently. “We are concerned, both because the fundamentals are weakening and because the financing situation is bad (and) could provide a source of a lot of stress, particularly for small and regional banks that have a very heavy concentration in commercial real estate.”

Bernanke’s concerns appear to be in line with the comments that were previously made by Dennis Lockhart, who is the president of the Federal Reserve Bank of Atlanta, as he had stated that the commercial real estate market was his greatest concern when he expressed “measured optimism” for an economic recovery in the United States.

“Lots of commercial construction is still in process, and until growth of supply stops, the industry statistics will continue to deteriorate,” said Lockhart.

Although there are still many concerns surrounding the future of the commercial real estate market, the bright side is that the struggling market will provide plenty of opportunities for investors who are willing to take a risk on purchasing these properties. So, if you are looking for a great investment opportunity, it looks like you will likely have plenty of options to select from over the next couple of years.

Eric Bramlett is the broker & co-owner of One Source Realty, a boutique Austin real estate firm. Eric manages a number of websites, including his Steiner Ranch real estate site, and actively writes an Austin blog.

Speak Your Mind