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Sales figures suggest that CRE markets are cooling

The commercial real estate markets in major California cities like Los Angeles, San Diego and San Francisco have been extremely active in recent years, but property sales data for the first quarter of 2017 suggests that investor enthusiasm is waning. First-quarter property sales in New York City were down by 58 percent compared with the same period a year ago, according to data released by the brokerage firm Cushman & Wakefield. Analysts say that overbuilding and political uncertainty may be to blame.

The business community generally reacted positively when Donald Trump was elected president, but many top executives are now expressing doubts. Some business leaders feel that Trump will be unable to pass the tax cuts he has promised, and others worry that the reduced taxes and increased spending the president is championing could lead to higher inflation, soaring interest rates and slower growth. These fears are particularly pronounced in sectors like real estate that are heavily reliant on financing and debt.

The commercial real estate sector also tends to react slowly to economic upheaval. Much can change in the time it takes to complete major commercial projects, and developers in cities that benefitted the most during the recent period of frenetic growth are being hit the hardest during the current slowdown. Industry sources have reported that even some of New York's most illustrious and respected developers are finding it difficult to secure financing their latest projects.

Completing projects in an expeditious manner may be the best way for developers to protect themselves from market fluctuation. Attorneys with experience in this area could help real estate developers accomplish this goal by assisting them with addressing legal challenges proactively and settling real estate litigation quickly. Lawyers may also help clients avoid misunderstandings and unnecessary delays by carefully scrutinizing contracts and other important documents.

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