WICHITA, KS (WichitaKSRealty.News) With all of the changes that blew up towards the end of 2016, many investors and real estate industry players are asking themselves: is it still smart to invest in commercial real estate? Can I expect a return from my investment anytime soon?
The change in administrations, a rise in interest rates since Election Day, and post-recession highs for property prices beg the obvious question: is it still a good time to invest in commercial real estate? Experts and investors are arguing that yes, it is still worth investing in commercial real estate, and here’s why:
- Outlook is good: Gross domestic product picked up in the third quarter, with a healthy improvement over 1.4 percent gain in the second quarter. All signs are pointing to yes.
- Job growth: Steady job growth over the last few years has led to low vacancy rates and rising rents, which has created demand within the commercial real estate market. This demand pushes for more office space, as well as creates a need for more apartments and other multifamily complexes for employees.
- Office rents on the rise: The low vacancy phenomenon and new office development in the pipeline have had a positive impact on leasing rates across the U.S. Office rents have risen by 1.0 percent over the quarter, reaching a cycle high for now.
- Rewards for risks: Real estate isn’t the only asset class priced at historic highs. Since the election, the Dow Jones Industrial Average has set six new record high closings. Clearly these rising prices are not keeping investors out of the stock market. The case for real estate is even stronger than for stocks. Buying commercial real estate today is much more rewarding compared with the low yields on other long-term investments.
Wichita is seeing plenty of investment and building re-purposing, such as 520 Commerce and a handful of other projects. This trend should make for great momentum regarding commercial real investing.