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September 18, 2016 / Johanna Bassols / 0 Comments / Investor Insights

Emerging Real Estate Trends in the US and Canada: Part 4

This is part 4 in a multi-part series about the latest Emerging Trends in Real Estate® report, an annual forecast on the outlook of real estate finance and capital markets, investment and development trends, property sectors, metropolitan area, and other issues affecting the industry in North America. Check out the earlier installments here.

Markets to Watch

The in-depth online surveys coupled with the in-person interviews that are used to create the Emerging Trends in Real Estate® report showed a great deal of movement in regards to markets to watch. Cities that are typically found in the top ten dropped to much lower positions while new markets stole the show. As predicted, secondary and tertiary markets are dominating, attracting people for their manageable environments, better value and considerable job growth. Many of the survey participants believe that the traditional “big six” markets, while providing relative security for investors in the past, have become so highly valued on the international scale that pricing has risen to levels that are unattractive to domestic buyers. Some industry experts disagreed, citing valid upsides to these top markets. The one point that was agreeable to all participants is that people have a wide array of options in a number of attractive markets.

Interesting movements in this year’s Emerging Trends in Real Estate markets-to-watch include:

  • A new number-one market, Dallas/Fort Worth, which climbed four spots from last year.
  • New entrants in the top ten, Nashville, Atlanta and Portland, Oregon, and Minneapolis and San Antonio break into the top 20.
  • Houston fell from the number one spot to number 30, due to concerns over the fall in the pire of oil combined with current levels of new development.
  • San Francisco dropped from three to eight, while other big-six markets, like Los Angeles, Boston and the Manhattan submarket of New York City, slipped into the top 20. Chicago fell out of the top 20, coming in at 26, while Washington D.C. dropped to 24.  The downward movement of these big-six markets is being blamed on pricing rather than attractiveness.
  • Tampa Bay/St. Petersburg and Columbus, Ohio moved into the top 30.

In last year’s report, Miami made it back into the top 20, and this year, the entire state of Florida is being viewed in a favorable light. Southeast Florida markets continue to shine while survey respondents and interviewees saw improvements in Orlando, Tampa and Jacksonville markets. Survey participants cite the rebound from the housing market collapse as the reason of the resurgence. One interviewee commented that “the real tailwind to Florida growth created by retiring baby boomers is still to come,” showing faith in the continued growth of that market.

The Top 20 Markets

  1. Dallas/Fort Worth: Employment growth is behind the rise to the top for this metropolitan area. A business-friendly environment coupled with an attractive cost of living made the Dallas/Fort Worth market attractive to corporate relocations. There are some concerns about potential overbuilding, but in general, new construction is still justified at this time. The outlook for the single-family market is very strong.
  2. Austin: The Texas state capital is one of the favorites among survey respondents. Continued strong economic growth is being fueled by diverse job creation ranging from service jobs to STEM and technology, advertising, media and information (TAMI) positions. All generations are attracted to Austin, and the outlook for all property types in above average. The only concern about the market is possibly that it is growing faster than the local infrastructure.
  3. Charlotte: Good job and population growth coupled with the development of urban centers continues to make the largest city in North Carolina attractive. Housing is the strongest sector in the Charlotte market, with industrial (serving the growing local economy) and hotels (handling the increasing numbers of business and leisure travelers) leading the commercial sectors.
  4. Seattle: With a diverse industry base and growth in the TAMI industries, the Seattle market has become very popular with domestic and global investors. The 2016 outlook for the commercial sectors in the market remains strong, with the exception of hotels, where the outlook is good, just not as good as the others. The single-family market is the most attractive as the population base continues to grow. The only potential problem identified from a local market perspective is a lack of development opportunities and public and private investment.
  5. Atlanta:  The market of the Georgia state capital is currently enjoying strong growth in key sectors of the economy without concern of oversupply. The low cost of doing business attracts corporate relocations, which is a key in the market growth. Survey participants had a favorable view of all sectors of the Atlanta real estate market, claiming no particular sector stood out. With strong outlooks for the local economy, investor demand and capital availability, the local outlook for the Atlanta market is good.

For more information about the other cities that make up the top 20 list, see the Emerging Trends in Real Estate® report.  

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