There’s one simple reason why the business of commercial real estate is so tricky: property values are always, always changing. Sometimes it’s possible for economists to predict which regions and which types of properties are going to be lucrative for investors, but it’s often hard to make certain predictions because there are so many factors that go into play.
For an inexperienced investor, recent articles profiling commercial real estate values may seem a bit confusing: the NY Daily News recently stated on October 1 that commercial real listings in New York City are healthier than they’ve been since 2007; FinancialBuzz.com posted on October 22 that Philadelphia is seeing an unprecedented amount of commercial real estate listings; and on October 23, the Houston Chronicle proclaimed that Houston is, by far, the leading U.S. city for commercial real estate values. So what’s the deal?
Quite simply, the entire American real estate industry is doing well because it’s finally starting to make a comeback after the Great Recession. While the real estate industry itself didn’t seem to be making much headway for a while, there were other industries that slowly started to grow: technology and energy, most notably, are two industries that weren’t affected by the recession so much that they were unable to grow. As these industries expanded, they provided a valuable foundation for the entire American economy to start growing again.
It’s clearly a great time for investors to make new purchases, and for inexperienced property investors to learn more about the business with very little risk involved. Many investors choose to work through a real estate investment trust, wherein investments are bought and sold through the stock market rather than as actual property deeds, because it’s easier to maximize profit while minimizing risk. Additionally, many financial advisers also specialize in commercial real estate values and investments — most big investors choose to get help from one of these investing firms because they stay up-to-date with all the property value shifts and possible influencing factors.
Regardless of where you choose to invest or how much experience you have, one thing is certain: there’s never been a better time to get involved in commercial real estate, but it’s imperative to understand how the industry works and to be willing to take some financial risks.
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