When considering a commercial investment property, what market condition should an investor be aware of during times of excessive construction?

When evaluating a commercial investment property during periods of excessive construction, the condition an investor should be particularly aware of is lower rents. Excessive construction often leads to an oversupply of commercial properties in the market. When there are more available properties than tenants looking to lease, landlords may be forced to lower rents to attract tenants. This can have a significant impact on the income potential of commercial investments, as lower rents can result in reduced cash flow and diminished returns.

Understanding this dynamic is crucial for investors, as it affects the overall investment strategy and potential profitability. An investor should assess market saturation and pricing trends carefully to avoid investments that may become financially burdensome or fail to produce expected returns due to decreased rental income.