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Commercial real estate trends forecast

Paying attention to trends in the commercial real estate market may help investors in California to plan their next moves. The ULI Center for Capital Markets and Real Estate just released its semiannual ULI Real Estate Consensus Forecast, and the information is somewhat optimistic. According to the forecast, experts do not expect a downturn in the commercial real estate market over the next three years.

Prices for commercial real estate properties are expected to rise 6.8 percent each year until 2017, and experts believe the next three years will see commercial real estate transactions averaging $503 billion annually. Capital from debt and equity is abundant, and there is likely to be a lot of competition for the top properties.

Analysts expect to see most of the commercial real estate growth in the hotel industry. From 2015 to 2017, the hotel industry is expected to have 6 percent gains in revenue per available room. Revenue for rental office and warehouse properties is expected to grow by 4 percent each year. By 2017, analysts say commercial mortgage-backed security issuance will probably rise to $140 billion. The 20-year average for CMBS has been $71 billion, and the peak was $229 billion before the global financial crisis.

Investing in commercial real estate can be very profitable when an investor has a good idea of when to buy and when to sell. However, there are many other factors that come into commercial real estate investing or development that have the potential to greatly complicate the process. An attorney can provide assistance to a client who is involved in a proposed transaction by reviewing the real estate closing documents and pointing out any potential problems.

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