Most Attractive Commercial Real Estate Markets

Most Attractive Commercial Real Estate Markets

  • David Passman
  • 07/31/18
The city of Los Angeles was named the most attractive commercial real estate market in the country again, for the third year in a row, by CBRE’s annual investor intention report. 

After surveying more than 300 commercial real estate investors about their feelings on the overall state of the market, Los Angeles remains a desirable location, however other markets continue to rise in popularity. Second on the list of popular commercial real estate locations was Houston, followed by New York and Seattle, which tied for third. San Francisco and Houston tied for fifth place. The list was rounded out by Atlanta in spot number six, followed by Washington, Denver, and Miami.

This report is evidence that Los Angeles is staking its claim as a contender to close the gap between the traditional Big 7 (New York, London, Tokyo, Singapore, Paris, Hong Kong, and Seoul), established world cities that attract international real estate investments. These international cities offer investors simple gateway connectivity to other international economies, metropolitan scale, a sizeable market, and a trust of global capital. 

The city’s focus on increasing its international reach by expanding its airport and ports has been crucial in increasing international interest in Los Angeles commercial real estate. In addition to extending its reach, 
the city has expanded its industrial specialization to include tech businesses, on top of the city’s traditional focus on the media and entertainment industries. All of these factors add to Los Angeles’ desirability among commercial real estate investors. 

The CBRE Americas Investor Intentions Survey 2018 catalogs the feelings of more than 300 investors hailing from throughout the Americas. The survey focuses on investment activity, strategy and risk preferences, preferred regions, key risks, and influential trends. Survey respondents include investment fund managers, insurance companies, and operators of pension funds.

In addition to ranking the most popular locations for commercial real estate investments, the survey also discussed property sectors prefered by investors in the coming year. The majority of investors (50%) noted their desire for industrial properties in 2018, followed by multifamily real estate (20%) and office space (14%).

Overall, investor sentiment is positive, according the report. In spite of rising interest rates, positive economic growth and favorable changes to industry regulations are causing real estate investors to see their industry in a more positive light this year. Changes in tax codes, including tax cuts within the industry, are also adding to the increased positivity noted by those surveyed.

Almost all of the investors surveyed this year plan to invest more money into the real estate market in 2018. And most believe that returns will increase over last year. More than half of investors questioned in the survey believe unlevered returns will increase nearly 9% in 2018. For further insight into Los Angeles’ real estate market visit The Passman Group today. 

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