Office-Sector Investors Also Look at Secondary Markets

Ian Ritter is online content manager at GRS Group

Ian Ritter is online content manager at GRS Group

We know that the multifamily sector of commercial real estate is seeing interests in secondary markets. Well, according to a recent conference that concentrated on the office sector, NAIOP’s O.CON: The Office Conference, that area of the industry is looking for opportunities outside of gateway cities too.

A GlobeSt.com O.CON report said that there are some misconceptions about markets that aren’t considered primary cities in the United States. It explained that there are higher wages, for example, in Minneapolis than there are in Chicago.

Other markets that were considered attractive that many investors might overlook include San Antonio and Milwaukee. Additionally, the Portland, Ore., metro area is a place that many Millennials are drawn to due to its mix between urban living and a robust employment situation. What makes these cities more attractive is that cap rates are higher, and investors could potentially experience higher returns.

An additional panel discussion said that more, and different, investors are getting excited about the office sectors. Foreign capital is becoming more involved in investing in the office sector and a lack of new construction is increasing demand for these types of assets.

This follows a Reis report on the office sector that backs up these claims.  Right now the coastal markets, such as Seattle, San Francisco and San Jose are seeing increased demand from several different types of buyers, including foreign investors. It is making firms look at more properties that are in the middle of the country.

For example, Denver is a hot area right now for overseas companies looking to place money. Plus, JLL and other firms see this trend contenting to gain traction.

 

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