Report: Commercial real estate transactions on the rise
A report summarizing the local commercial real estate market activity over the past year revealed the local market has been tightening.
Rents and sales prices increasing even though transaction volume decreased from 2016 to 2017, the report showed.
The report’s author, SVN Highland managing director Lock Richards, said in the document 2017 was a transition year. He said confidence is growing but investors are acting with caution in what Richards described as a new political atmosphere.
First quarter activity indicated an increase had taken place in both lease and sale transactions. Richards said in the report that vacancy rates among real estate in general are continuing to fall.
“The first quarter 2018 year-to-date had eight total transactions,” said Richards. “If we keep going at this pace or higher, we will end up with 32 or more commercial sales in Grass Valley/Nevada City for 2018, compared to only 24 last year — about a 33 percent increase assuming first quarter’s trend continues.”
Richards said that the greatest obstacle facing those interested in obtaining commercial property is the shortage of available property.
“Office properties remain relatively plentiful,” said Richards, “but retail, industrial and leased investment properties are very hard to find. With the cost of new construction sky high, not much is being built.
“We are in a holding pattern where little new construction will occur until rents and values increase enough to make new development a risk worth taking.”
Richards predicted a continuing trend of slowly decreasing or low vacancies in all product types (office, industrial, and retail), creating continued upward pressure on both lease rates and property values, as well as increasing inflation and rising interest rates.
Richards said that the effect of these factors depends on the rate at which they increase. If slow and measured, lease rates, property prices and market activity locally should increase. If fast or volatile, all could fall.
SVN Highland Commercial is based in Nevada City and identifies itself as a real estate organization that provides commercial real estate services including commercial real estate listings, commercial loans and a list of recent transactions.
Jennifer Nobles is a staff writer for The Union. She can be reached at firstname.lastname@example.org or 530-477-4231.
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