California residents may be seeing a Spirit Halloween store in their local malls in the near future. The chain operates mostly online throughout the year, having a physical presence only two months out of 12. Stores such as Spirit Halloween appeal to malls or other retail landlords with vacant space because national chains may take months to sign leases. Therefore, companies like these can fill space and create revenue in the interim.
Commercial real estate investors in California might find good opportunities beyond big cities. The chief economist from the National Association of Realtors said that investors have curtailed their activities around Class A assets. Smaller markets, however, have been presenting buyers with chances to buy properties with the potential for stable and consistent profits.
Before proceeding with the purchase of commercial real estate, California buyers should complete due diligence on the property to make certain that it is what has been represented to them and that it is worth the asking price. Conducting due diligence may take weeks or months. Sellers often want to negotiate shorter periods so that they can complete the transactions faster.
The value of commercial real estate varies greatly throughout California, and investors appear to be growing cautious according to the NREI/Marcus & Millichap Investor Sentiment Survey for the third quarter of 2017. A majority of respondents, 71 percent, believed that the price cycle for commercial properties had reached a peak.
With the 2028 Olympics coming to Los Angeles, the city is poised to increase its rank among world cities. Global cities are those cities that lead the way economically and culturally. Business and innovation boom in these centers. Already, Los Angeles has a thriving real estate market, and this will only increase the health of it.
Banks in California may not be required to obtain a certified appraisal to approve loans for commercial properties valued at or under $400,000 if a new rule is approved. Currently, financial institutions that provide loans must have a certified appraisal for properties valued at more than $250,000. This increase could make it easier for commercial real estate buyers to be approved for loans. Federal banking agencies came together to propose the rule change since it would alleviate some of the regulatory burden placed on them under the current rule.
Economic and political uncertainties are continuing to suppress commercial real estate values in California and around the country according to a growing number of industry experts. Commercial property prices dropped by 0.3 percent in June, and falls were observed in all five core property segments. The decline marks the second consecutive month that values on the online real estate company Ten-X's pricing index have fallen. However, commercial property prices remain near record highs and have more than doubled since 2010 according to Real Capital Analytics.
Prospective purchasers of California commercial real estate most likely do not look forward to performing due diligence, but they make the effort because they know that taking shortcuts in this area can cast a long shadow. Poring over documents may not provide much in the way of excitement, but the information this kind of research can yield about the legal, financial and physical condition of a property could be crucial.
California commercial real estate developers may already have felt the impact of credit constraints and Dodd-Frank regulations on their ability to refinance their projects. Hesitant lenders, a scarcity of loan funds and growing piles of required paperwork have made it a difficult, time-consuming process to refinance commercial real estate.
Those who are thinking about purchasing commercial real estate in California may be encouraged to learn that commercial real estate lending activity is strong amidst growing interest rates. In fact, commercial lending is growing faster than other types of loans, such as retail and unsecured loans.