Commercial real estate was battered during the recession. New construction came to a virtual halt and values fell. Now there are signs that commercial real estate is coming back. N.C. State University economist Mike Walden explains why.
I think there are two big reasons: One is our economy has improved. Again, not totally back in all cases. But we have seen improvement in the economy in the last couple of years. Spending is up. Jobs are also up. So as a person (who’s) looking at investing in commercial ventures, the economic outlook is certainly better now than it was say three or four years ago.
“But a second big reason, I think, for the commercial real-estate revival that we’ve seen is bargain hunters are coming in. Just like in residential real estate, commercial real estate values have actually been very battered over the last couple of years. That is to say, they have fallen. They’ve fallen to very, very low levels compared to where they are. So, I think, quite frankly there are a lot of folks who are into commercial real estate who are looking at these values and (saying), ‘Hey, I can’t pass this up. I’m going to go buy that shopping center.’ Or ‘I’m going to go buy that commercial building.’ So, that’s beginning to happen in a lot of areas. I think that’s also driving the whole process.
“And again this is good for the economy, because there were worries a couple of years ago that commercial real estate was really going to fall off the edge of the Earth. It hasn’t. And it is coming back. And it is now contributing to growth in the economy.”