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Property investors may be contributing to troublesome price surge

Maryland investors may know that commercial real estate prices have been rising significantly. The investment-driven increases are cause enough for concern that the Wall Street Journal and some other news sources have even compared growth rates to the mid-2000s boom. The Federal Reserve also took note of the market rise in a July report to Congress.

According to Realty Today, the trends observed in cities such as New York, Los Angeles and Chicago are being replicated in foreign cities like Osaka, London, Berlin and Sydney. In the second quarter of 2015, commercial building sale assessments set records in terms of per-square-foot pricing.

One Chicago researcher said that the amount of capital being poured into real estate assets may not bode well for the future. Although he advised against alarm, he noted that major capital influxes commonly have detrimental impacts down the line. Central banks have been injecting cash into the economy, and interest rates are sufficiently low enough to make commercial real estate investment seem more eye-catching than other financial vehicles. In addition, investors from global markets are focusing on domestic commercial properties.

Real estate deals can take time to complete. This is especially true with commercial properties, as buyers may have specific purchase requirements that hinder negotiations unavoidably. The fact that the transfer of commercial real estate isn't necessarily a brief procedure means that market fluctuations can impact the viability of a deal in the middle of the transaction. While certain contract provisions could help buyers and sellers protect their investments, it may be best to consult with a real estate attorney in order to learn about the legal options afforded by specific agreement types prior to initiating the transaction.

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