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Commercial Real Estate Investing: What You Need to Know

commercial real estate investingThough the economy has not fully recovered since the financial collapse of 2008, at least one sector of the economy is doing quite well: commercial real estate investing. Commercial real estate is doing remarkably well, reinvigorating business and putting billions of dollars to good use. Businesses, much like homes, need investing in. Without commercial real estate financing, nearly all buildings used for business purposes would have no way of being built.

The National Association of Realtors recently found that, although the global economy is still on the slow side, economic factors in the United States are predicted to support commercial real estate lending. Indeed, there are some promising signs that point toward robust growth in commercial real estate. Industrial vacancy rates, for example, are expected to drop down to 8.4% in the fourth quarter of this year from the 8.8% rate in the fourth quarter of 2014. In the retail market, the rates are similarly improving. Vacancies in that market are predicted to drop down to 9.5% by the end of the year from the current 9.7% rate.

Perhaps the most convincing sign that commercial real estate investing is strong is the state of commercial mortgage-backed securities (CMBS). CMBSs are a type of commercial real estate loan that is backed by commercial rather than residential mortgages. Due to favorable payment periods and relatively low interest rates, CMBSs are very popular with commercial investors. An estimated $1.4 trillion in commercial real estate loans are expected to mature by 2017. Of those, roughly a fourth are in the form of CMBSs. Needless to say, the amount of capital present in those loans are sure to boost economic growth and business development.

The world of financing is a risky yet overall prosperous business to be in. For more information about commercial real estate, feel free to leave a comment or question at the bottom.