by James Antoyan, of the JLA Real Estate group
Riverside, CA – The giant that was the commercial real estate market has fallen. The old saying goes, “the bigger they are, the harder they fall,” but this adage is usually used for examples that don’t have the chance to recover. The commercial real estate market is pushing to repossession itself for a positive 2011, and so far the efforts seem to be working.
Taxes are a big reason for a possible optimistic outlook in the near future for commercial investors and their properties. In previous years, the federal government has tried to spur the growth in the residential housing market by using tax incentives. This act, called the Community Recovery and Enhancement Act, is meant to jump start investment and could help prevent job losses, stop foreclosures and strengthen banks. Investors would be able to deduct losses from their taxes and put more capital into new projects
This act is not the only thing helping out the market. A slew of billion dollar investments have significantly improved the economic conditions past where they once were. These ventures have not only slowly increased many banks’ confidence in beginning the lending process again, but it also decreased the amount of outstanding commercial mortgage debt. Now that commercial real estate is showing signs of turning around, the signs are looking good for potential buyers. Now commercial real estate and residential real estate are pretty different when you take an outside look at the definitions: commercial real estate is for businesses that want to turn a profit while most residential real estate is for personal use. The two markets, though separated by trade, are both connected through the market that drives housing prices to fluctuate. The market mainly varies because of the amount of cash flows available to the public and the rates that banks are willing to charge. During this recessions (still ongoing but starting to free up in some areas) cash flows from home and business owners dried up and forced foreclosures that put owners and renters in dire consequences.
James Antoyan, at JLA Real Estate group is finding that due to factors previously stated, the tables are starting to turn in favor of buyers. Losing a major tenant is a painful and potentially harmful financial event for a real estate owner and that is why rent and housing prices are starting to come down in many areas. Even though housing prices may be getting cheaper, possible buyers may not have the credentials to purchase them. In the past three years, the Inland Empire has had the highest amount of foreclosed houses on the market with a staggering 62% of residential houses sold coming from distressed sellers. All of these families who were foreclosed upon will need to take five to seven years to try and rebuild their credit scores in order to get a bank to trust them again with another loan. Owners are realizing that buying property can be a fickle negotiation right now and are offering many reduced renting prices because they need the revenues just as badly as the tenants need a place to live.
Three years after one of the biggest market collapses ever, the market is slowly being rebuilt from the ground up with the customer in mind.