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Commercial property owners still face financial difficulties

Real estate in South Florida is hot. At least that's what many of our previous posts here have detailed. However, while it may be true that residential real estate is a seller's market, the exact opposite appears to be true for commercial real estate.

According to a recent report, commercial property owners are still facing financial difficulties, even as the overall real estate market brightens up. This leaves all kinds of business owners, whether they are in the market for retail space, industrial property or office buildings, in the position of power during negotiations.

In stark contrast to the residential side of the real estate market, where previous posts have covered stories of the planned expansion in the number of condo units in the South Florida area, as well as the increase in the value of single-family homes throughout the area, commercial property looks to be at a standstill. The recent report indicated that there will not be a great deal of new construction of commercial property, due to the fact that the current supply is outstripping demand. And, with values remaining steady, some commercial property owners are being forced to offer quite a few concessions to potential tenants who are interested in signing leases.

Although it is almost universally a good thing to be the party with the most leverage during a negotiation, real estate bargains can be notoriously detail-oriented. It may be a great time to buy or lease commercial property, but for any business that has decided to strike while the iron is hot, one of the most important parts of the negotiation is to make sure all of the options are weighed carefully before putting pen to paper.

Source: SunSentinel.com, "Commercial real estate market 'bouncing along bottom'," Paul Owers, Jan. 3, 2013

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