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Factors that may impact CRE development in 2017

California commercial real estate developers might wonder what 2017 may bring to the market. There are several factors that experts believe may impact the availability of financing and the market itself during this year.

Interest rates are broadly expected to increase soon. This increase is expected to only be about a quarter of a percent, however, so the increase should not have a dramatic effect on commercial real estate. With thousands of loans scheduled to mature during 2017, borrowers might be led to refinance their loans so that they can lock in interest rates while they are low.

Another factor that may impact the commercial real estate market is the increased lender competition that is caused by the broad availability and diverse sources of financing. Since the fundamentals of the market are currently strong, a boom in new loan originations is likely. At the same time, a new rule for commercial mortgage-backed securities that requires lenders to retain 5 percent of the loans that they originate may lead lenders to tighten their underwriting practices for CMBS. This may mean that developers might have to look to alternative financing sources for certain types of projects.

Developersmay want to retain the services of business and commercial law attorneys who might guide them through the real estate transaction process. Attorneys may seek needed easements for their clients and review proposed sales contracts to ensure that their clients are protected. If disputes arise, lawyers may represent their clients' interests through any real estate litigation that might happen. Attorneys may also conduct the title searches and market analyses that are important when people purchase commercial properties. Conducting due diligence on a property before purchasing it may help a client to avoid making costly mistakes costing thousands of dollars.

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