Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Effects of Inflation on Commercial Real Estate
Despite the shock of the pandemic, and now war overseas, commercial real estate market recovered in 2021 from its pandemic-induced slowdown in 2020 and is expected to continue to progress throughout this year. Record numbers of commercial real estate transactions took place in 2021. The fast growth of available jobs last year, resulting in under 4% unemployment at year's end, fueled real estate demand. A record $809 billion in real estate sales occurred last year and real estate stocks gained more than 43% compared to the S&P 500's approximately 15 percentage points higher than the S&P. While growth of the job market and the economy are the most important factors affecting commercial real estate, the emergence of historic rising inflation has its effects as well.
Other important trends propelled the commercial real estate market in 2021. While the stock market was rallying into 2021, the bond market was dropping with inflation at 7%, and investors sought commercial real estate investments with annual yields between 6% and 12%. The Federal Reserve's past efforts to keep interest rates low benefited property owners with existing large commercial loans and may have prevented the potential collapse of the real estate market. Owners who had secured mortgage loans at low interest rates over that last several years have the benefit of controlling their largest expense during inflationary times. As a result, their property values increased. The values of the existing properties with low interest rate mortgages are further enhanced by increased costs of new construction and increasing interest rates. Fewer new developed properties limits supply and increases the value of existing properties.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.