6 Things to Consider in a Rising Interest Rate Environment

Now that interest rates are on the rise and inflation is at 40-year highs, there are many concerns in the commercial real estate industry. The Feds are raising interest rates in an effort to curtail inflation –  but this quick reaction is causing worry among investors. The Feds indicate that Interest rates are expected to continue to rise through the end of the year and potentially into the first or second quarter of 2023.

Although interest rates are rising, they are nowhere near the levels of the early 2,000’s.  In fact, current interest rates are still at reasonable levels compared to historical averages and may be a good time to take advantage of some of the opportunities out there, before rates potentially increase.  Listed below are some ideas to keep in mind when deciding to purchase a new property or  sell  or lease your current property:

1. Industrial properties are still in demand with little inventory and can fetch aggressive prices (for the time being),
2.  Industrial rental rates are solid which means an owner may want to hold onto the property and lease it,
3. Sell and cash out and wait for opportunities that may present themselves within the next 10-18 months,
4. If the property is debt free or has little debt, owner can sell and lease back to create stable income for an investor,
5.  If owner has little or no debt, they can sell and offer to carry the loan at an acceptable rate which will give the buyer ease of purchase with potentially more attractive terms and costs then the bank can offer,
6. Explore different ways to maximize profits and returns through repurposing  a property such as Condo it and sell off in pieces, occupy a portion and lease out the rest

When it comes to selling your commercial property, it is important to seek professional guidance so that you are aware of all of your options.