Overall, 2019 was a good year for commercial/investment property owners in Western Nevada County.
In all three commercial property sectors – industrial, retail and office – the Grass Valley and Nevada City areas saw year-over-year increases in asking rents partnered with decreasing vacancy rates, resulting in higher values and increasing sale prices. Interestingly, however, the number of sale transactions and total sale volume fell overall from 2018 to 2019. This may be attributed to minimal new construction activity and weak returns in alternative investments, providing owners little incentive to sell.
The length of the current economic expansion has exceeded most everyone’s expectations and many are now beginning to sense headwinds. The rate of expansion is slowing, the Fed is feeling the pressure to step in again to stimulate with monetary loosening, political tensions and upcoming election uncertainties are shifting business owner and investor mindsets leading to more restrained decision-making, and lenders are beginning to underwrite more conservatively.
The fortunate news is that the last “Great Recession” was marked by a failed financial system fueled by unbridled speculation and overleveraging, which are not present in today’s economy. Sound investment fundamentals are still prevalent, leading most economists to predict a decelerating, but still positive 2020, barring any unexpected macroeconomic or geopolitical issues.