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CRE report predicts steady returns in third and fourth quarters

Commercial real estate investors in Texas and across the country may encouraged by a report released by the brokerage company NAI Global. The New Jersey-based firm scrutinizes vacancy rates and rents in the office, retail and industrial sectors of 21 key U.S. markets, and its report for the second quarter of 2017 predicts that returns in the third and fourth quarters of 2017 will remain steady. The report also reveals that the often-maligned retail sector may actually be healthier than some experts believe.

Significant drops in New York and Chicago caused office rents to fall slightly during the second quarter, but rents in the other 19 markets studied actually increased. Office vacancies remained at 9.6 percent for the third quarter in a row, and absorption rose in the industrial sector despite falling in a dozen markets. Industrial rents, which had increased by 1.7 percent in the first quarter, inched up by a further 1.6 percent in the second according to the NAI Global report.

These vacancy rates are as low as they have been in years, and vacancies in the beleaguered retail segment, which were 4.8 percent in the second quarter, are nearing pre-recession levels. Retail rents, which rose by 1.8 percent in the second quarter according to NAI Global, are a further indication that the end of brick-and-mortar retailing may be further off than many observers have predicted.

Studying market trends can help developers to identify commercial real estate opportunities, but taking advantage of them usually involves overcoming several legal, zoning, environmental and land use issues. Attorneys with experience in this area could help developers to anticipate and address these problems before they become major hurdles. Costs can mount quickly when work on commercial developments is halted, but taking a proactive approach could prevent stoppages and keep projects on track.

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