Ten years in and commercial real estate prices continue to rise.
According to statistics from the latest U.S. National All-Property Index, real estate prices across all four main core property sectors have increased for the tenth year in a row, recording a year-over-year growth of 7.2%. Prices in the industrial sector are leading with a year-over-year growth of 11.8% while retail is trailing with an increase of only 3.1%. Here’s why commercial real estate prices continue to rise.
There are many factors contributing to this pricing growth, including low interest rates, strong real estate fundamentals, basic supply and demand principles, and abundant capital to invest. However, as prices continue to rise, buyer and sellers alike wonder how close the market is to a cyclical peak. While experts note that each real estate sector performs differently, they also point out that some assets are simply more valuable over time.
This means that pricing levels in certain sectors will appear at their peak in the near future; however, long-term investments should continue to do well. This is due to continues rental-rate growth, economic expansion, and the lack of supply.
The one downside of pricing expansion is that buyers are more cautious about their investments. Additionally, sellers are often not sure if they should be selling their assets or waiting to capitalize on further pricing growth. This standoff has created a noticeable decrease in transaction volume in many property markets.
This is what you need to know about how and why commercial real estate prices continue to rise. Are you looking for assistance with all your commercial or industrial real estate needs? If so, then contact the experts at California Commercial Realty Advisors, Inc. Our dedicated team is ready to assist you today.