Commercial real estate is making a comeback. After struggling the past few years, prices of prime real estate properties are increasing, and were up 6.2 percent in September, according to recent data. What’s behind this increase? Low interest rates. Lower interest rates are prompting investors to purchase rental properties to generate rental income instead of keeping the cash in a bank. Borrowing rates for these ventures are extremely cheap, allowing for a much higher yield.
Of the various types of commercial real estate, the indoor mall and apartment sectors have been particularly impressive. Indoor malls have increased 13 percent from one year ago and 7 percent above their price peak in 2007. Apartments have increased 6.7 from one year ago, and are 7 percent above their peak price in 2007.
Take a closer look…Talk to a Realtor® about the commercial market. Are they seeing prices rise in their community? How different is the commercial market in relation to the residential market in their area? Talk to commercial buyers for their insights into the market. How has it changed over the past few years? Which sectors do they see as strongest?