Commercial real estate values (and the rental income), as are all the goods, a function of supply and demand. If the offer is (with high vacancy rates) high, there is push a high degree of price pressure, the prices downward. Closely at the supply of commercial real estate, and vacancy rates are low, the price rises to meet the demand. This price fluctuation is a valuable indicator of how fast resources are allocated to the various areas of commercial real estate market andis seen by many companies and regional governments as indicators of the financial health of a city or municipality.
Right now, despite the credit crunch, the sub-contracting business, commercial vacancy rates are at all time lows in many cities. As a commercial real estate investor, if you happen to (possibly at one of the hot markets like Austin and Washington, DC), are the growth areas in more and more units available, there are people who have aa lot of money to spend and the need, in a "trophy as" territory in which they have access to the financial centers or government agencies to not do business with. In these areas, you can vacancy rates of below 3%, compared to about 20% of the average vacancy rate for leasing business in the U.S.. Are also in the secondary markets, see vacancy rates of less than 8% are becoming common and rents are going up accordingly.
The attempt to profit on the hot market is not easy - they areAll in developed areas and assembly of land for the new building is far from impossible. Are in DC, New York and London, many builders are trying to further floors to its construction phase, more rental space - with all the problems that brings with them their current tenants - in a desperate attempt to get to have more square footage to work with.
To make money in this market as a commercial real estate investor, you need to properly play the odds. Look for trends thatshow a growth curve is taken, or try an easy, after it starts, instead of trying to catch the wave to hit, as it crests. There are exceptions - the market for office space in DC is tight, since the Eisenhower administration, while it is unusually tense, there were only three in the last fifty years, where office space has decreased demand in DC. The same goes for Manhattan real estate and London in the Haymarket area, although the latter two arealmost impossible to buy without being in the tens of thousands, if not invest hundreds of millions of dollars available. A note counterpoint and warnings are Austin, Texas, and San Mateo, California. While Austin have rebounded by 90,000 jobs after losing 41,000 to the tech bubble burst, the growth rate level at any given time. It is not the demand for more office space, as it with the DC and the financial district of New York and London. Austin (and San Mateo, inIn particular) are both cities that have room to sprawl, it is building office towers speculators who lose their shirts on there ... so the trick is indicative of the reading, where the demand will be when the building is completed, or long-lining is completed by the customer rent and lease of the building.
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