Industry experts identify 2018 CRE trends

Most commercial real estate markets in Pennsylvania and around the country should continue to provide healthy returns for investors, according to a panel of industry experts. At a Nov. 3 meeting of the National Association of Realtor's Commercial Economic Issues & Trends Forum, leading economists and bankers talked about the opportunities and challenges real estate developers and investors may face in the year ahead. They also pointed out that the economic data does not always align with prevailing media narratives.

Media outlets have reported in recent years that suburban office parks are struggling to lure companies from major metropolitan areas, but the figures reveal that most new office construction is taking place outside big cities. Much has also been written in recent years about deserted shopping malls and the death of brick-and-mortar retail. However, the data indicates that retail sector rents are rising and more stores have opened than closed in 2017.

Commercial real estate values have increased by about 90 percent over the last seven years, and many pundits have predicted sharp declines in the months and years ahead. Nevertheless, the NAR's chief economist expects rents to only fall by a modest 3 to 7 percent in 2018. He also believes that falling rents will be a problem mainly felt by landlords in big cities.

Real estate markets can turn quickly when public confidence is shaken, and completing deals or projects in a timely manner is often crucial for commercial real estate investors and developers. Attorneys with experience in this area could help prevent potentially costly delays by anticipating legal issues and planning for them. Lawyers may put contingency plans into place that are designed to avoid litigation and settle potentially thorny challenges such as zoning disputes, land use disagreements and environmental issues as quickly as possible.

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