It’s on every real estate agent’s lips these days: this is a buyer’s market. And it’s true. The real estate bubble burst has made today one of the best times for qualified buyers and investors to put their money into real estate. But it’s not only residential real estate that’s seeing some of the lowest priced properties in years. The commercial sector of the real estate industry is experiencing its biggest downturn since the 1990’s.

Vacant Space

Right now there is a surplus of commercial real estate property. Empty office buildings and shopping centers throughout the country are begging for tenants. The economic recession has resulted in plunging profits for many businesses. With stores closing and unemployment rising, there are less and less enterprises to fill the thousands of vacant commercial properties that are currently out there on the market. And to top it off, there are even more commercial construction projects still unfinished, projects that were planned during the peak of the real estate boom and are now heading into completion with no guarantee of returns. Thus, developers are, with good reason, worried that they will very likely end up losing money.

In 2008, commercial real estate sales went down by 73%, according to Real Capital Analytics. Rising vacancy rates have resulted in hundreds of properties going into foreclosure. Joblessness in the construction industry is at 15.3%, over twice the average rate of 7.2%.

 All of this spells bad news for commercial real estate owners, contractors and developers. But for potential investors and qualified buyers, especially first time buyers, the current commercial real estate market poses one of the best economic opportunities in years. Both the banks and the Federal government are working to implement new incentives. Lower mortgage rates and special foreclosure deals almost guarantee sizeable returns.

Investing In Commercial Real Estate

If you’re looking to invest in the commercial real estate market, keep in mind the many factors that are working in your favor. Overbuilding, for one, means more properties to choose from. With multiple businesses closing within the same block, property prices will be more competitive.

 Also, purchasing cheap, under-kept properties and fixing them up is a viable option now more than ever. Builders and contractors are charging less because of the competitive environment created by the commercial real estate market crunch. Also, because contractors have experienced a reduction in available projects, many have an overstocked inventory of building materials and supplies, something that also translates into bigger savings for you if you’re planning on purchasing a fixer-upper.

The important thing is to take your time when looking for a commercial real estate investment property. Shop around and make sure to check out all of the properties in the neighborhood. Compare prices and location. Remember that, in a buyer’s market, you can afford to be more picky with your decision. No need to rush. By shopping around you will start to get a feel for what properties are overpriced and what properties are actually worth the tag. With this knowledge you’ll have an additional upper hand when it comes time to make an offer.

Also, when you hire a commercial real estate agent, make sure that he’s a buyer’s agent, preferably one who has specialized in representing buyers for several years. As in residential real estate, a commercial real estate agent who represents both buyer and seller in a deal will usually have conflicting interests. You should also make sure that you pick your own lender. Getting an outside commercial real estate lender ensures that the conditions of the loan will be more objective.

Lastly, it’s good to be wary of free incentives. Many commercial real estate sellers will advertise free incentives as a means of attracting potential buyers. But often these incentives end up costing you, the buyer money, as they get tacked on to your closing costs during the negotiation period.