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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.
6) Seattle: Seattle’s commercial real estate market might not be an obvious choice to crack the top 10, but the area has much going for it. Strong job growth, by companies like Amazon, is spurring new-office construction, with 925,000 square feet in the pipeline this years, says Marcus & Millichap.
Austin: Second quarter office vacancy stood at 10.2 percent, down from 11.6 percent during the same year-ago period, reports Oxford Commercial. Asking rents and absorption are
rising, and unemployment in the city is at 4.1 percent.
8) Miami: During the height of the recession, Miami was one of the poster children for overbuilding in commercial real estate. However, now average asking rents in the office sector are at $30 per square foot, the highest they have been in years reports Colliers South Florida. Besides office, vacancy rates are extremely low in the industrial and retail sectors.
9) Boston: The population in Boston increased 4.6 percent from 2010 to 2013, yet unemployment continues to fall, says JLL. As a result, development is taking place across many commercial real estate sectors, including multifamily, office and retail. Oxford Properties also has faith in the market, recently spending $2.1 billion for five assets.
10) Orange County: Orange County is another area that took a big hit during the recession but has recovered well. Office vacancy rates are decreasing, while asking rents and absorption are on the rise, says DAUM Commercial Real Estate
Services. Additionally, unemployment in the second quarter declined to 5.2 percent from 6.5 percent during the same period a year ago.
Now that you’ve seen the top 10 markets, according the ULI and PWC, are there any that you feel will fall in 2015? If so, what markets will take their place?
The BEA has released the underlying details for the Q2 advance GDP report.
Investment in single family structures is now back to being the top category for residential investment (see first graph). Home improvement was the top category for twenty one consecutive quarters following the housing bust ... but now investment in single family structures is the top category once again.
Q2 2014 GDP Details on Residential and Commercial Real Estate
This first graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).
Investment in single family structures was $188 billion (SAAR) (almost 1.1% of GDP).
Investment in home improvement was at a $179 billion Seasonally Adjusted Annual Rate (SAAR) in Q1 (just over 1.0% of GDP).
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However - even though investment in single family structures has increased significantly from the bottom - single family investment is still very low, and still below the bottom for previous recessions. I expect further increases over the next few years.
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