Caution the Word for Commercial Buildings in Slumped Market
One of the few bright spots in the real estate market has been the commercial building sector but that is starting to change. Despite the fact that residential housing was down nearly 30%, austin commercial real estate showed an increase of nearly 25%. However, the rising costs of running a business and the unemployment rate hitting all time lows has created a potential for decline with commercial real estate that has yet to be seen.
Home foreclosure rates are on the rise and this looks to have a dramatic effect on the commercial buildings around the country. This can be clearly seen with the decline of commercial development projects. While there was a time when this area of real estate was enjoying an increase despite the housing market, developers are being ever more cautious now. The appeal of developing land for commercial use has dropped significantly over the past few months and it looks to continue that decline well into 2009.
Part of the increase in the commercial building projects is attributed to what has become known as “loose lending.” This is a method where lenders are boosting the market by lending to those who would normally not be qualified. With the new restrictions in place the funds that are being dispersed for such projects are much lower causing a decline in the commercial building projects. In most cases the building projects are going to slow in this slumped market despite the fact that they appear on the rise. The reason being is that the commercial building market is much slower than the residential market so less information is available at such an early stage.
Source: http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_sperling&sid=a.X91SkgOd8g
