Ian Ritter is Online Content Manager at GRS Group
In his recent column, GRS Group’s Matthew McGovern talks about rising interest rates and the correlation between that and commercial real estate investors taking more risks.
This is certainly true in the sense that more firms are targeting assets in secondary markets. A recent GlobeSt.com interview with a partner from Deloitte’s Toronto office reveals that Canadian investors, which are some of the strongest ones here, are especially interested in secondary markets in the United States because of similarities between cities north of the border.
There are many reasons for this, points out Andres Szita, cofounder of Los Angeles-based Ethika Investments, including falling unemployment, a rise in economic growth and stable currency. Though investors are still looking at properties in gateway cities on both coasts, some secondary markets are strong because those cities have well-performing economies which can provide substantial returns.
This PWC/Urban Land Institute report says that among the strongest top 20 markets for investment this year include Austin, Tex.; Denver; Nashville and Seattle. It also says that value-added properties, as opposed to core assets, are the most sought-after developments. These markets provide greater access to debt and equity financing as well.
These trends aren’t just taking place in the United States, either. Botswana, not a country that many likely think of as a commercial real estate hotbed, is gaining attention because of its transparency and new office developments taking place there. Meanwhile, similar trends of high returns are making New Zealand a potentially strong place to invest in commercial real estate.