Cost of Commercial Real-Estate Propery Decreases
Posted on Jun 11, 2010 8:36am PDT
Another Wall Street Journal article reports that the value of commercial property is declining. According to Moody's Investors Service Inc, commercial property values decreased by 42% in contrast to the peak prices seen during October 2007. However, this report may not be as bad as it seems, according to the economist Bill Dunkelberg; with the cost of office and industrial space going down by 32% and retail space going down by 28%, Dunkelberg says this creates an "opportunity for small firms."
Nevertheless, this may be easier said than done with the “tight credit environment” making it more difficult for entrepreneurs to jump on this opportunity, especially with the default rate of commercial real-estate mortgage for 2010's first quarter at 4.2%, the highest since 1992, reports the article.
Although banks are still cautious about taking out more loans, the article offers suggestions about how entrepreneurs can still be able to do so by making themselves look more attractive. This includes sound financial plans that would assure the bank the loans would get paid back, "solid credit histories [,] and established bank relationships."
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