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Getting help in a declining commercial real estate market

Those segments of the real estate market in Los Angeles and in other major cities across the country that managed to escape the economic crash in 2008 might want to get ready for steep declines in demand and in pricing in commercial real estate and residential units. Developers, property managers and owners who are in the midst of projects might be caught with an overabundance of commercial and residential units that cannot be sold or rented.

The problem in the real estate market is exemplified by the fact that approximately 20,000 hotel rooms are currently under construction in New York City at the same time that occupancy rates are decreasing. Owners and developers might find themselves confronting a classic supply and demand predicament with prices dropping as rooms remain unoccupied. This phenomena is not limited to hotel chains and developers.

Condominium sales have slowed dramatically as well. High-priced units that were being scooped up by buyers and investors are remaining unsold for longer periods of time than they had previously. One reason for a decline in high-end commercial real estate and residential property might be new regulations limiting the ability of non-U.S. residents to buy real estate without disclosing their identities. Real estate transactions in excess of $3 million require such disclosure of the buyer's identity.

A declining real estate market could make it difficult to obtain commercial mortgages to move ahead with the development and construction of new projects. Developers might find themselves facing problems in obtaining alternative sources of financing. Consulting with an attorney might be advisable in situations like these.

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