More issues impacting commercial real estate transactions

| Oct 6, 2014 | Real Estate Transactions

Although it may be easy to understand the desire to preserve historical structures, disagreements can arise in their classification. In the context of land use and zoning, such efforts may impose a height restriction on skyscrapers or other commercial development projects. 

Yet zoning is but one potential issue facing commercial developers. Some commentators question whether the historically low interest rates set by the Federal Reserve may be coming to an end. If that happens, it may be harder for commercial developers to attract investors and make property investment sales. 

Higher interest rates could also be problematic to developers whose commercial mortgage loans will be reaching maturity in the next few years. If interest rates rise too quickly, borrowers may have to resort to their own equity to cover the gap. Hopefully, most will be able to refinance.

Even if interest rates do rise, there may be alternative strategies to attracting real estate investors. For example, real estate crowdfunding allows investors to buy commercial properties through online marketplaces, but a real estate attorney might caution that such sites are generally not subject to the regulations promulgated by the U.S. Securities and Exchange Commission. As a result, a real estate attorney’s input may be more important than ever. 

Other approaches include the securitization of commercial properties and real estate investment trusts. Some REITs are registered with the SEC and publicly traded, but others may be non-traded REITs. The risks of each may differ. You can learn more about the types of legal issues that can surface during commercial transactions by visiting our firm’s Worcester real estate attorneys page.