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Slower commercial property market could impact Maryland residents

As the real estate market enters its mature cycle, it could spell an end to earnings growth for commercial real estate companies. CBRE Group's stock declined by 14 percent in August 2015 with 7 percent of that coming in one day. In addition, HFF Inc. saw the value of its share decline by 20 percent in August 2015.

While it is true that broader indexes have declined in recent weeks, commercial real estate stocks have fallen further. For instance, the S&P 500 has seen a drop of 10 percent while real estate investment trusts have lost just 5.7 percent of their value. The 49 percent increase in new commercial real estate deals in the first quarter of 2015 compared to the same quarter in 2014 was largely attributable to several large transactions occurring at that time, and the increase in the second quarter was less than half that.

Weaker lending growth may also be a sign that commercial real estate earnings growth may slow. In 2013, there was a 2.7 percent increase in outstanding commercial real estate mortgage debt followed by an increase of 4.2 percent in 2014. Those who research lending figures say there will be a lending increase of 4.7 percent in 2015. Factors that may be going against additional lending include a stronger dollar and weaker oil prices.

Those who are thinking about purchasing commercial real estate may wish to consult with an attorney who has experience with these matters prior to closing the deal. Legal counsel may be able to review relevant documents in order to point out and take steps to correct any problematic issues that may arise in the future.

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