Spotting Rising Stars - What to Look for in Emerging CRE Markets
When it comes to commercial real estate investment, choosing the right up-and-coming cities is crucial for value and growth potential. But how do investors spot the rising stars that will deliver returns now and into the future? The key is understanding the indicators of a strong emerging CRE market. Key factors include:
With these factors in mind, let's explore the US cities currently showing high potential for commercial real estate investments.
Nashville stands out in 2024 as an attractive destination for commercial real estate investment. Its fast-paced market, with properties selling in just over a month, and 1.6% increase in home prices in December 2023 compared to the previous year, signal a strong demand. The city's appeal is drawing an influx of buyers from high-cost areas, enhancing its investment potential.
Economically, Nashville is on a growth trajectory, ranking high in job growth among large metros. This economic expansion supports a consistent demand for commercial spaces. Nashville’s cultural prestige, known for its country music heritage and landmarks like the Country Music Hall of Fame, adds to its desirability.
These factors – from economic growth to cultural allures paint a picture of Nashville not just as a hub for commercial activity, but also as a city with a unique character and potential in the real estate domain.
Raleigh, NC, stands as a notable player in the 2024 real estate arena. The city has witnessed a considerable increase in median listing home prices, reaching $475K in December 2023 – a 7.6% growth year-over-year. This upward trajectory, in conjunction with Raleigh’s classification as a buyer’s market, indicates a landscape of affordable property options within a growing population base, potentially leading to a heightened demand for rental properties.
Key to Raleigh's appeal is its role in North Carolina's Research Triangle, an area renowned for top-tier universities like Duke University, North Carolina State University, and The University of Northern Carolina at Chapel Hill. TThis concentration of higher education establishments not only cultivates a well-educated workforce but also draws substantial investment in sectors like research, technology, and healthcare. This influx, especially from a significant student demographic, bodes well for the city's rental market.
Additionally, Raleigh's economic resilience is underscored by low unemployment rates, fostering a healthy business environment. This blend of economic robustness, educational prominence, and an upward-moving real estate market positions Raleigh an attractive location for both investors and residents in 2024.
Columbus, OH, a prominent city in central Ohio and home to the renowned Buckeyes, is experiencing growth in both its population and investment sectors. In December 2023, the city saw a 6.0% increase in home prices from the previous year, with the median price reaching $265K. The real estate market here is active, with homes selling in an average of 43 days – faster than last year. Although the number of homes sold has slightly decreased from 820 last year to 733 this December, the market's vibrancy remains evident, especially among young families seeking affordable living options.
In terms of economic development, Columbus has seen notable advances, particularly in the healthcare sector, which has significantly contributed to its overall GDP growth over the past decade. Centers like the Wexner Medical Center have become focal points for medical research and development. Additionally, Ohio's favorable property laws enhance the city's appeal for real estate investment. The steady increase in Columbus's population further indicates its emerging status as a significant market in 2024, offering potential for those interested in diversifying their investment portfolios.
Indianapolis, IN, affectionately known as Indy, is rapidly evolving into a significant tech hub. The arrival of major corporations like Salesforce, Anthem, Inc., and Eli Lilly has brought a surge of talent and development, particularly influencing the multifamily real estate sector.
Market-wise, Indianapolis is showing a positive trend. The average home value is currently around $215,216, reflecting a 1.2% increase from the previous year. Recent data from Redfin indicates an average house price of $230,000, a 4.1% rise compared to last year. Moreover, the rental market is also seeing growth, with apartment rent prices rising by approximately 3.8% over the past year.
This steady increase in home and rent prices indicates a growing interest in Indianapolis, especially as it evolves into a tech-focused city. These trends suggest a market that is not only appealing to homebuyers but also presents opportunities for investors interested in a city that is actively adapting to technological advancements.
Denver, CO, is witnessing a notable surge in its commercial real estate market, a development that parallels the city’s population and job market growth. Currently, Denver boasts around 4.4 million square feet of commercial space available in various sectors, reflecting its expanding market.
A key driver of this growth is Denver's growing tech and e-commerce sectors. Major players in e-commerce, such as Dollar General and Home Depot, have significantly increased their presence in the area. For instance, Dollar General recently established a new facility near Denver, encompassing close to 1 million square feet, underscoring the city’s growing role in the digital and e-commerce economy.
Denver's commitment to sustainability also plays a significant role, attracting businesses and investors focused on green initiatives. Coupled with the thriving industrial market, driven by e-commerce and logistics, Denver presents itself as an economically booming location, offering diverse opportunities for commercial real estate investors.
Jacksonville, Florida, while not as high-profile as Miami, it offers solid opportunities in the commercial real estate sector. Home to Florida's largest port by cargo volume, the city is a key player in logistics and trade, benefiting from its strategic Atlantic coast location for transportation and distribution.
The economic landscape in Jacksonville is diverse, with key sectors including finance, healthcare, and transportation. This combination offers a more stable economic base than many other cities in Florida. Jacksonville's population is on the rise, drawn by promising job opportunities and lower living costs, which in turn is fueling demand across different real estate markets, from residential to industrial sectors.
Additionally, property prices and operational costs in Jacksonville are relatively lower compared to other more expensive markets in Florida. The city's pro-business environment, supported by favorable tax incentives, further adds to its attractiveness for commercial real estate considerations. Jacksonville's consistent economic development, coupled with its affordability, positions it as a viable and practical destination for those interested in commercial real estate.
Boise, Idaho, is swiftly gaining attention as a dynamic and promising player in the commercial real estate landscape. The city is experiencing a steady rise in population, drawing attention with its affordable living costs, attractive remote work options, and a high quality of life. This trend is creating an increasing demand in various real estate segments, including residential, retail, and office spaces.
Boise's economy is well-rounded, with significant contributions from sectors such as tech, healthcare, education, tourism, and government. This diversity helps in creating a stable and resilient economic environment. The office market in Boise has shown signs of stability, with the vacancy and availability rates in the fourth quarter of 2023 standing at 10.4% and 10.9%, respectively, pointing to a healthy and balanced market.
Boise's comparative affordability, especially when contrasted with larger coastal cities, along with its high livability scores, makes it a compelling option for a wide demographic, including young professionals and families. This, in turn, is increasing the attractiveness of its commercial real estate. Additionally, Boise's business-friendly climate, marked by low taxes and streamlined regulations, is an added incentive for investors. Recent developments in the airport and logistics sectors are opening up new avenues, especially in the industrial real estate space near major transport hubs.
In wrapping up our journey through these key US cities for commercial real estate in 2024, it becomes clear that a thoughtful application of the essential factors discussed initially is key for informed decision-making. Understanding and analyzing each city's market specifics, geographical strengths, and economic resilience are vital steps in recognizing the right investment opportunities.
For those considering investments in these cities, a deep dive into their distinct market characteristics, infrastructure, and evolving trends is recommended to align with both market potential and individual investment objectives. Such detailed analysis is key in leveraging the potential that these emerging markets offer.
Finally, in the ever-evolving landscape of real estate investment, effective management of your portfolio is paramount. Vyzer offers innovative solutions that streamline investment tracking and cash flow management, empowering investors to navigate the complexities of the real estate market with ease and confidence.
