The recent dramatic drop in oil prices left the American economy on the edge of its seat. Plunging from about $110 per barrel to under $50 per barrel, the prices evidently reflected the effects of a simultaneous oversupply and reduction in demand of oil.
Despite a few metropolitan regions, which are highly dependent on the energy industry, the decline in oil prices is forecasted to benefit the United States economy. Most significantly, lower prices will directly result in an increase in household disposable income. Having to spend less on gasoline will encourage consumers to spend more on other things, including commercial sectors such as hotels and retailers.
Lower oil and energy costs will also foster business investment and expansion as construction, manufacturing, and logistics expenses are reduced.
The impact this economic change will have on the commercial real estate market will vary by sector: