The Great Real Estate Reset

Explore rising CRE risks, hidden investment opportunities, and expert tips for buying property overseas.

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In today’s Finance Pulse, gain insight into how:

  • Houston, San Francisco, and Chicago face skyrocketing commercial foreclosure risks, and why investors should watch for adaptive reuse opportunities in these cities.

  • Overlooked sectors like retail, Class A office space, and medical real estate are reshaping the commercial landscape with hidden investment potential.

  • Americans can navigate the complexities of buying overseas real estate by addressing taxes, currency risks, and estate planning with expert guidance.

Each of these articles is penned by members of Forbes Finance Council, key luminaries shaping the future of finance.

The Cities Facing the Highest Commercial Real Estate Risks

The work-from-home movement has reshaped the urban landscape, and some cities are feeling the squeeze. A Kaplan study of 19 U.S. cities revealed Houston, San Francisco, and Chicago are at the greatest risk for commercial real estate foreclosures.

Here’s why:

🌟 Houston's Economic Heat Wave: Despite booming industries like energy and healthcare, Houston's overbuilt office market struggles with a 555-day-on-market average for vacant spaces. The city's foreclosure risk index tops the nation at 0.78.

🌁 San Francisco's Perfect Storm: Tech growth meets housing scarcity and a work-from-home culture, leaving 23% of its office space vacant. Its foreclosure risk score of 0.59 is the nation's second-highest.

🌆 Chicago's Office Exodus: The Midwest's financial hub has seen a revival in residential life, but 16% office vacancies in the Loop dampen hopes for recovery. Chicago rounds out the top three with a foreclosure risk score of 0.46.

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3 Overlooked Opportunities in Commercial Real Estate

Despite the gloomy headlines about empty offices and shuttered stores, some corners of the commercial real estate (CRE) market hold untapped potential.

Here’s where forward-thinking investors are finding hidden value:

🛍️ Retail’s Revival: Experiential retail, grocery-anchored shopping centers, and community-focused properties are thriving. Investors who reposition outdated strip malls with food halls, gyms, or medical tenants are creating vibrant spaces that attract foot traffic and secure long-term value.

🏢 Office Space Reinvention: While remote work has hurt commodity office spaces, Class A properties in prime locations are thriving. Tenants prioritize modern designs, wellness amenities, and hybrid-friendly layouts. For investors, reimagining these properties can unlock new opportunities.

🏥 Medical Real Estate: An aging population and increasing healthcare demands are driving interest in medical office buildings and outpatient facilities. With high tenant retention and long leases, these properties offer stability and strong fundamentals.

8 Key Strategies For Buying Real Estate Overseas

Purchasing property abroad can be exciting—but it comes with complex financial considerations. Don’t let hidden pitfalls ruin your dream investment.

Here’s a glimpse into how to get it right:

🛡️ Know Your U.S. Tax Duties: U.S. citizens must report worldwide income, including rental profits or gains from foreign properties. If your overseas accounts exceed $10,000, expect to file additional reports, such as an FBAR.

📊 Fit Property Into Your Financial Plan: Avoid over-concentration. Real estate abroad can add asset and currency diversification but should align with your broader portfolio goals.

🏢 Choose the Right Ownership Structure: Direct ownership simplifies taxes, but adding entities (like LLCs) can complicate legal and tax obligations, especially in foreign jurisdictions.

💲 Evaluate Financing Options: Foreign banks often require larger down payments and higher rates. Match your loan’s currency to your income to mitigate exchange-rate risk.

Wrapping Up

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