It has been a relatively decent year for commercial real estate in Philadelphia this year according to the Federal Reserve Board, and the latest numbers show that the year will finish by continuing its trend of modest gains for the city’s market.
According to what the Fed calls the ‘Beige Book,’ their ‘Summary of Commentary on Current Economic Conditions,’ this is a trend that has been seen for most of the year in commercial real estate across many of the 12 Federal Reserve Board districts. Philadelphia makes up one of those districts.
Philadelphia and a few other districts reported a moderate increase in total business loan demands. This increase along with an improved delinquency rate in both the consumer and business segments within the district could be essential in order to maintain and improve upon these increases in the commercial real estate market.
Some of the other districts are also reporting stronger markets than a year ago and an increase in demand for both office and industrial real estate. The report seems to indicate that large infrastructure projects such as roads and bridges may be sources of potential strength in the commercial real estate markets in various districts. Infrastructure improvement across the country has also been touted by many as an essential component to our economy’s resurgence and therefore this theory seems to have some political support behind its thought process and numbers.
While the gains in area districts such as Philadelphia provide optimism for the markets, other districts are concerned that the banks may be exposing themselves to greater risk by investing in more and more long-term loans in the hopes of reaping higher returns on their investments.
Unfortunately, there is always risk involved in any kind of real estate and the commercial real estate market is not immune. That is why having knowledgeable and experienced legal representation is so important in mitigating these risks so that you can comfortably pursue your rewards.
Source: Credit Union Times, “Year Caps Off with Continued Gains in Commercial Real Estate: Fed,” Michelle A. Samaad, Nov. 30, 2012