4 Hot CRE Investment Markets to Watch as 2018 Rolls On
When it comes to CRE investments, the old real estate adage remains true: it’s all about location, location, location. Just like anything else, some real estate markets are hotter than others -- and that applies to commercial real estate, as well. The new year brings with it new opportunities for investment and, in particular, investments in commercial real estate.
When determining these cities, a few key factors were taken into consideration: population growth, job growth, diversification of the vital industries that drive the economy, and access to a high quality workforce. Below is a snapshot of 4 CRE investment markets that should be hot in 2018.
Of the markets in the United States with a population of 500,000+, Denver’s unemployment rate going into 2018 was the lowest (a scant 2.7% at the close of 2017). Denver consistently ranks among the nation’s best places to live, making it a very attractive market to draw top talent from around the world. Examples of industries that drive the local economy in Denver are aerospace, natural resources, oil, transportation, technology, telecommunications, and more. CRE tailored to these industries will do especially well in this hot market.
Moving down south, Atlanta is quite possibly the hottest market for CRE in the United States in 2018. In addition to one of the nation’s largest gains in metro households for the 5 year period between 2012 and 2017, Atlanta job growth is exploding right now -- pacing at approximately twice the national average (20% versus 10%, respectively). Atlanta is also business start up friendly, meaning it is the perfect location for budding businesses that are just getting off of the ground. Some of the current top industries in Atlanta include film, information technology, technology, consumer goods, transportation, financial services and more.
Durham makes up part of the area in North Carolina known as the the Research Triangle, consisting of Raleigh, Durham, and Chapel Hill. The Research Triangle is home to about 20% of North Carolina’s population, and features Research Triangle Park, which is a nationally recognized healthcare and medical research hub. In fact, the area is currently attracting around 80 new residents each day, mostly due to Durham’s strong job market and quality of life. In addition to outpacing the national average for population growth, most of the new residents of Durham are younger (early to mid 20s) -- sort of a perfect storm for explosive CRE growth. In addition to healthcare, Durham is known for its manufacturing, business and professional services, leisure and hospitality, and financial services.
Last, but certainly not least, is the quirky favorite: Austin. Labor demand continues to be strong in Austin, with job growth strongly outpacing the national average and the unemployment rate remaining low. In fact, there has been a high-tech labor shortage in Austin recently -- college grads in the tech field are getting snatched up for jobs right away, but there still aren’t enough workers to cover the demand. By poaching talent from other markets, Austin is bringing in a new wave of tech-savvy millennials - and they aren’t likely to be leaving. US News and World Report ranked the Austin metro area among their best places to live in the US, thanks to the quality of life and job market, among other factors. In addition to tech, household goods, natural resources, hospitality and leisure, government and healthcare also round out the driving forces behind Austin’s economy.
CRE’s Future in 2018 and Beyond
If you’re interested in CRE growth, or even if you’re considering investing in CRE yourself, these 4 markets are the places to watch. With a strong job market, steady population growth, and a diverse mix of industry, these markets are primed for CRE growth in 2018 and beyond.