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Popular CRE markets around the country

For many years, U.S. commercial real estate investors focused their interests on major cities like New York, Los Angeles and San Francisco, but the tides are starting to change. They are moving away from major cities and metropolitan locations in favor of mid-size cities like San Jose, Miami and Dallas.

One of the biggest deals regarding commercial real estate so far in 2016 was the $150 million purchase of the Datran Center in Miami. The real estate group that co-purchased this piece of property also purchased three office buildings in Charlotte and garden apartments in Cary, North Carolina, showing that this shift in smaller markets is becoming a new trend. A partner in the real estate firm says that a primary factor in these purchases is seeking reasonable prices that can offer a solid rate of return.

The rate of return for the Miami purchase was estimated to be at about 6 percent. In comparison, New York properties were estimated to be between 4 and 4.5 percent in the last six months of 2015. During that period, Boston had rates between 4.5 and 5.75 percent while San Francisco's rates were between 4.75 and 5.5 percent. These areas are also associated with having some of the highest prices. Investors actively search out markets that are cheaper but where they see rents starting to rise. For 2016 and 2017, these markets include San Jose, Boston, Columbus, Dallas and Philadelphia. These cities have between a 5.75 percent and 7 percent expected yield.

Investors who are interested in commercial property and but who are worried about lease disputes and other issues that may affect the progress of the transaction may want to have legal assistance during the process. An experienced attorney can review existing lease agreements as well as the proposed financing and purchase documents to identify clauses that may prove troublesome.

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