Following is another installment of my coverage of the recent ULI Fall Meeting.
As we mentioned before, the “Emerging Trends in Real Estate 2017” report unveiled there was packed with a ton of great information for commercial real estate investors.
For this article, we are focusing on the top five leading markets for investment and development opportunities.
Leading the way for a combination of both categories was Austin, Texas, which was ranked first for development and third for investment. The attraction to this market, the report says, is based largely on its resilience during the global financial crisis, Austin’s growing population and its educated workforce. Though it probably won’t attract a lot of foreign investment, domestic interest is very strong.
Dallas/Fort Worth follows Austin, and is ranked first for investment and fifth for development. The area is well on its way to be “considered as a core primary market.” Like Austin, it has avoided the peaks and valleys that other locales like Houston, which was extremely impacted by falling oil prices. The reasons for this, among others, are growing technology and medical industries, its perception of soon becoming an 18-hour metro area and becoming less of exclusively suburban market.
Next up is Portland, Ore., ranked third overall and Seattle, which is ranked fourth. This indicative of continued interest in the Pacific Northwest’s commercial real estate industry. Portland, eighth for investment and second in development, is popular for its interest by new residents attracted to its quality of life and low cost of doing business for employers. The industries heading up the area are professional services, technology and business services.
In the case of Seattle, the technology industry, home to the headquarters of Microsoft and Amazon, is the leading line of business. Aerospace, due to the major presence of Boeing, is also still very strong, however, there is some concern about future job losses. Population growth in that area, ranked second in investment and eighth in development, is reportedly twice the national average, which will give a huge boost to the multifamily sector of commercial real estate.
The fifth spot on the list is Los Angeles, ranking sixth for both investment and development. It is attracting investment from other core United States markets. That’s because its recovery has taken longer than other locales, and now investors are jumping in to take advantage of high returns. What is helping is a continuation of its public-transportation infrastructure’s growth.
In total, there were 37 markets that look favorable for both commercial real estate investment and development. It remains to be seen how the presidential election will impact this interest, but so far, reports say that it shouldn’t hurt CRE.