The Top 10
Commercial Real Estate Markets
It’s probably not surprising to industry observers that San Francisco took first place in a recent survey conducted by PricewaterhouseCoopers and the Urban Land Institute — Emerging Trends in Real Estate 2014.
After all, the city is centered in the country’s strongest tech region and property values across the board reflect this distinction.
However, there are some smaller markets, such as Seattle and Austin, that some might not have expected to make the cut.
Let’s take a quick look at each of the top 10 commercial real estate markets, as ranked by PWC and ULI:
1) San Francisco: As we said, not a big surprise here. Vacancy is down, rents are up, construction is happening, and transactions are on the rise, according to a Colliers International report on the San Francisco office market during the second quarter. Class A rents rose 6.3 percent from last year’s fourth quarter, hitting $72.98. Vacancy is at a paltry 8.3 percent, and 2.8 million square feet of leasing took place in the second quarter alone. Office landlords can thank the robust job market—there is only 4.4 percent unemployment in the city.
2) Houston: Houston’s thriving energy industry leads Texas’ strong economy in comparison the rest of the country. The industrial market in the metro area continues to maintain its strength, in part due to a 5.1 percent unemployment rate, according to a second quarter JLL report. Asking industrial rents, at $5.44 per square foot, rose five percent year over year, and just over 2.6 million square feet was absorbed in the first half of the year.
3) San Jose: It stands to reason that if San Francisco is strong due to the formidable technology industry, then the nearby tech hub is faring well, too. The San Jose/Silicon Valley office market is unique to other parts of the country in that new construction is taking place, according to a Cassidy Turley report on the region. In addition to experiencing increased occupancy, absorption, and asking rents, 4.2 million square feet of office product is underway.
4) New York City: When isn’t the Big Apple among the top of lists such as these? The office market in Manhattan has recovered quickly from the recession, and big leases are
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getting signed downtown. Rents continue to
creep up, and there was 566,000 square feet of leasing in July alone, according to a recent CBRE report.
5) Dallas/Ft. Worth: Houston may lead Texas, but the Dallas area’s commercial real estate market is not far behind. Job growth is bolstering this metro area. “DFW’s employment growth is the second-most in the nation in absolute terms and the largest overall on a percentage basis among large metros,” says a Transwestern report detailing the area’s second quarter. Several industries are hiring right now, providing economic diversity.
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office, retail, multifamily, industrial and hotel.
In recent years, however, institutional investors and developers
have become attracted to more niche product, including seniors housing, medical office buildings and self-storage facilities. In the following gallery we outline some of the emerging asset classes in commercial real estate.
By Jordan Sale - Sep 16, 2014
Aren’t All Obvious