Commercial real estate booms and busts are generally affected by the construction of too much space. This cycle’s problems have arisen from the deep recession seeping into commercial property.
The financial lending crisis and not overbuilding as in the past, added to poor economic activity and a weak job market, are the problems.
The weak economy has been driving down rents. Many property owners are finding it difficult to refinance short-term financing when due. Property values consequently moved down, as in residential housing.
But many larger commercial owners, such as publicly owned real estate investment trusts (REITs), did better. Especially those with substantial equity and access to public funds. It was an opportunity for them to take advantage of marked-down, available assets at lower cost.
In what appears to be the turnaround, commercial rentals now are beginning to stabilize and move up.
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