Commercial Real Estate Market Headed For Recession?

May 26, 2017

Landlord Representation That is the trillion dollar question isn’t it? There is so much going on today in so many different areas, both domestically and internationally, that affect our national and local economies. Let’s just look at what is going on today and not all the possibilities that could happen soon. The residential and commercial real estate markets are slowing in Florida because bull markets don’t go on forever, something people seem to forget every economic cycle. So these markets have slowed but they certainly haven’t stopped by any means. Vacancy rates are still low, especially at high quality properties. There are enough projects in the development pipeline that properties will be built for at least the next 2 – 3 years because financing is in place. Locally we have been outperforming the national average for job growth and the economic strength of tourism, the ports (for both tourism and commerce), and population shifts are things that other states can’t rely on like we can. Nationally the economy is very different than our local economy. There are different issues like how the retail downsizing is affecting American small towns, labor shortages, and areas that just haven’t recovered. Rent growth for all product types has slowed. All that said I don’t think we are heading for another recession (I do think there are some things on the horizon that could push things in that direction but that is a blog for another day and we only focusing on the now), we are experiencing a market correction. Full employment, less business regulation, lower taxes will help keep the U.S. economy chugging along. And let’s not forget that whatever problems America has pale in comparison to the rest of the world. This is evidenced by the incredible amount of foreign capital that is being invested in the U.S., by friends and foes alike, and as we well know they all love buying Florida real estate of any kind. This has only increased during the global recession and particularly by the economic collapses in Puerto Rico, South and Latin America. The Panama Canal expansion is finally yielding the benefits we hoped for and they will only increase with time. So despite a lot of negativity in the media about the economy we are in much better shape than most would think. I am very hopeful that with some small changes (corporate tax rate, reducing capital gains) the economy can elevate to another level. As always thanks for reading and have a great day.