Breathless over Brexit: What will it mean for U.S. Commercial Real Estate?

Breathless over Brexit: What will it mean for U.S. Commercial Real Estate?

As the world markets reacted to last week’s decision by U.K. voters to leave the European Union, one of the many potential economic impacts is the effect on U.S. commercial real estate.

For the foreseeable future, the only thing certain is uncertainty – which traditionally drives investors to seek out stability.  U.S. commercial real estate will continue to be an attractive and stable investment for many sources of capital.  In fact, as the fallout from the Brexit vote was driving down markets last Friday, many REITs were actually trading higher.  Market volatility and the stronger dollar also mean that a long-anticipated increase in interest rates will likely be on hold until the dust settles, ensuring continued access to money at current levels.

The possible negative impacts on the commercial real estate industry are less certain.  The comparatively stronger dollar could mean an increased cost of capital for some foreign investors, particularly from Europe and the U.K., potentially reducing some sources of investment.  New trade barriers – real or anticipated – could also lead to diminished exports, adversely impacting export-dependent businesses and related asset classes.

Any negative effects may take some time to materialize, if at all, especially when considering that the process of withdrawal could take a number of years.  Overall, interest rates will remain low in the near term, and investors from Asia and the Middle East will continue to find U.S. real estate attractive.  Increased demand for investment properties could also open up new opportunities outside of high-profile areas such as New York.

Real estate aside, U.S. investors might take one small comfort in the Brexit fallout:  with the pound trading at 31-year lows, traveling to the U.K. has not been this cheap in decades.

If you are considering the sale or purchase of property as an investment vehicle, the professionals at WCRE can provide the right guidance and analysis to help generate the maximum return on your assets.

Please visit our website at www.wolfcre.com for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our New Jersey and Pennsylvania commercial real estate brokerage firm.

[column-group]   [/column-group]