Rising Interest Rates: 6 Tips to Consider when Purchasing or Leasing Commercial Real Estate

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 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 2024. They are still nowhere near levels seen in the early 2,000’s.

In spite of interest rates rising, there are still advantages for interested commercial real estate investors and this may be a good time to take advantage of some of the opportunities out there.  Listed below are 6 tips to consider when purchasing or leasing commercial real estate.

1. Industrial properties are still in demand with little inventory and can fetch aggressive prices (for the time being),
2.  Industrial rental rates are holding steady 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.