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Commercial real estate market facing challenges

With the close of another year coming up soon, many Florida businesses are making adjustments and planning for 2017. This is particularly true for those involved in commercial real estate, which is likely to see some changes in the upcoming year.

Experts are raising concerns about the commercial real estate market in the coming year as a result of many different factors. On the one hand, interest rates may be set to rise, which could make it more expensive to borrow money. Defaults are also rising as well, as a number of loans are not being paid off by borrowers around the country. Some estimate that borrowers will not be able to pay off about 40 percent of commercial mortgage-backed securities loans that will be due next year.

Certain properties are affected more than others, including suburban office properties and shopping centers. The rental apartment market has also seen a growing number of vacancies, among other markets.

In light of these factors, many are predicting a slowdown in the commercial real estate market in the coming year. The financial issues could lead to more issues with refinancing commercial real estate, obtaining financing or engaging in certain kinds of development.

There could also be a growing number of disputes between different entities involved in commercial real estate, which can generate litigation. Accordingly, businesses that are involved in commercial real estate should understand the options they have to confront the existing and upcoming challenges they may face. This includes knowing how to best protect themselves in the event litigation becomes a reality.

Source: The Wall Street Journal, “Trouble brewing in commercial real estate,” Peter Grant, Nov. 15, 2016

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