Risk Considerations in Real Estate Investment

In a recent analysis, an investment firm evaluated a potential acquisition of a commercial real estate property as part of its alternative investment strategy. The property is located in an urban area experiencing revitalization, which has historically exhibited volatility in property values.

The firm is particularly focused on understanding the risk considerations associated with the investment. Key factors include market trends, economic conditions, and property-specific risks. Among other concerns, they are particularly wary of the cyclical nature of real estate, the potential for sudden economic downturns, and changes in local regulations that could impact property values.

Given these considerations, which of the following risks should the investment firm prioritize when assessing the above commercial real estate investment?