A quick glance at one of the many financial periodicals or web based financial media outlets from one day to the next and one might be left guessing as to the state of our economy. Will the Federal Reserve raise rates in June, or September, or ever? Is the economy strong enough to absorb an increase in interest rates?
For those with boots on the ground, it appears that the economy is in fact growing and a sense of confidence within the business community is driving demand for commercial property. Despite what the Federal Reserve does or does not do, the current environment of low cost of capital allows for those with a need to expand to do so, with the caveat, their ability to locate space.
Markets ebb and flow and it is often seen that periods of robust growth are followed by brief pause before reversing course or continuing to charge forward. Strong demand and limited supply coupled with the consensus that the Federal Reserve will continue to stay the course until the end of Q3 means that those with inventory hold the cards for now, but there will be a tipping point. Whether the landscape is due for change in September is yet to be determined, but the fact is when this period of “cheap money” goes away, it will take with it many of those with a need to expand. While defining the time between now and then is somewhat unpredictable, the fact is that high demand for property exists now, and with it high market values providing an ideal scenario for sellers and would-be sellers to reap the benefits of their investments.
The Blau & Berg Company
Michael F. Schipper
May 28, 2015