In the wake of the wave of foreclosures that affected homeowners in Michigan and across the country, some analysts predicted a similar crash would hit the business market. However, although commercial real estate prices did fall by about 40 percent, a disaster such as that suffered by the housing market never materialized. Experts investigated why this would be and came to some interesting conclusions.

One of the reasons was that the bubble never rose as high in commercial real estate as it did for homes. One expert said that this was due to timing. During the housing boom, the commercial sector lost workers, land and materials. They were not recovered until the housing bust in 2005, when these resources became available once again to commercial projects. That means that there wasn’t enough time to build up a big bubble before the recent financial crisis hit and stopped construction across the board.

Another reason, according to the financial expert, was that joblessness and declining home prices caused many homeowners to miss their mortgage payments. This wasn’t the case with most commercial properties, however, which continued to see cash flow in from rents via their properties’ tenants. This, in turn, provided enough money to offer relief to business property owners who were struggling on their own with the credit crunch caused by the financial meltdown of a few years ago.

Commercial real estate issues in Michigan may be settled more easily and amicably with the assistance of an attorney experienced in addressing boundary disputes, zoning issues and construction disputes. A lawyer may help clients work out purchases and sales, contracts and other challenges facing commercial property owners.

Source: CNN, “Why the commercial real estate crash never came”, Nin-Hai Tseng, September 23, 2013