Commercial Investment Real Estate July/August 2019 | Page 13

pricing and, therefore, higher yields, with economies that still offer confidence and a successful exit strategy. For example, in 2018, Atlanta’s office sector saw a continuing surge in investor interest, with nearly $4 billion in sales, well above the metro area’s historical average. (By way of comparison, the figure for Boston was $6.4 billion.) This activity came from a range of buyers and buyer types, both domestic and international, reflecting deep and wide interest in Atlanta. In Dallas, the office sector saw $4.4 billion in office sales during 2018, one of the highest annual figures in that market. The smaller Phoenix area achieved nearly $2.8 billion in sales in 2018, a new annual peak for that market. Reconsidering the Suburbs Increasingly, many opportunities for both attractive pricing and higher yields are coming from the suburbs. Looking again at Atlanta’s top office sales of 2018, the property types and loca- tions are striking. Unsurprisingly, sales activity in newly con- structed towers was strong, but older, renovated properties also commanded strong pricing. Six of the top 10 sales in Atlanta in 2018 occurred outside of the central business district. In Dallas, 90 percent of 2018’s office sale volume was in the suburbs, while suburban properties accounted for 85 percent of Phoenix’s sale volume. In contrast, 71 percent of Boston’s sales volume in 2018 was found in its central business district. This new interest is due in large part to the urbanization of the suburbs. Neighborhoods that once had traditionally suburban qualities now offer urban amenities, such as entertainment and public transit, which give office users and residents an experience often associated with urban centers — all at price points lower than those in urban centers. These projects become beacons, generating successful leasing results with above-market rates that capture investor attention. With prices continuing to skyrocket in New York and Los Angeles, this heightened level of activity in second-tier cities should continue, with suburban assets gaining more attention. New players entering those markets will seek to bring more value to their portfolios. Between the added attention given to urban- ized developments in the suburbs and the fact many investors are just beginning to take notice of these properties, well-leased and amenitized suburban office buildings may be where the greatest opportunities will be found for the foreseeable future. Keith Pierce is director of research for the Southeast U.S. at Transwestern Commercial Services. Contact him at [email protected]. CI Concepts Revisited: Methods and Models New Designee-Only Courses Refresh Your Skills and Earn CE Credit The Robert L. Ward Center for Real Estate Studies is pleased to offer four new designee-only, online self-paced courses covering core CCIM concepts. Designees can register to earn real estate CE credit or take the courses at a reduced rate without CE credit. Earn your CE credit by taking the following Ward courses. To learn more, visit www.ccim.com/education or call [phone], opt. 2 CIREMAGAZINE.COM Comprehensive review of CCIM designation core concepts including financial, market, investment and user decision analyses. CI 102 Revisited: Market Analysis Models Comprehensive review of how to perform market research, assess market demand, and forecast future demand and opportunities for commercial real estate investment. CI 103 Revisited: User Decision Models Comprehensive review of the space acquisition process, comparative lease analysis, valuing leasehold interests, and lease exit strategies. CI 104 Revisited: Investment Decision Models Comprehensive review of applying key investor decision-making analyses to optimize ROI, finance CRE investments, and effectively forecast investment performance. July | August 2019 11