Judging by the number of constructions cranes accenting the skyline, Austin is thriving in many respects. Austin has a stable economy which has led to record-breaking population and real estate growth. It’s also consistently ranked among the best places in the country for everything from places to raise a family to best places for entrepreneurs. In terms of building wealth, Austin offers an ideal commercial real estate market for investors.
According to a recent ranking by worldwide real estate services leader, CBRE, Austin ranks 11th among all commercial real estate markets in the survey. The list, known as the 2019 Americas Investor Intentions Survey, covers all asset types and reveals the sentiment of top investors about investment markets in the Americas.
In this year’s survey, real estate investors indicate that they are prioritizing secondary markets that can offer greater potential for both equity and income growth. The survey also reveals that this is the fifth consecutive year in which investor interest in secondary markets has increased. This year, investor interest in secondary markets has increased 33 percent.
A Breakdown of Investor Sentiment by Asset Type
- Industrial & Logistics is still the preferred property type, cited by 39 percent of investors as the most attractive for investment in 2019.
- Multifamily closely followed in second place, with 37 percent of investors naming it as the next most attractive property type—up from 20 percent in 2018.
- Office was cited by 10 percent of investors as the most attractive for purchase in 2019.
- Retail’s share of investors (9 percent) has held essentially steady over the past three years, despite competition from e-commerce.
- Given that reckoning, Austin was ranked No. 11 by investors in the Americas as the most attractive for property investment.
Growing interest in Austin office space is very apparent throughout the city. With the continuing development of office space in the downtown sector and space being leased before hitting that market, commercial space in the city has become one of the hottest commodities in Austin outside of parking space on South Congress.
Austin Commercial Real Estate Outlook
“The office sector continues to be a shining star for investors moving into the Austin market,” Troy Holme, Executive Vice President at CBRE, said in a prepared statement. “As demand persists for large blocks of space, CBD, North/Northwest and East side buildings are being delivered to the market almost fully leased.”
Based on the survey results, it looks like investors will remain active in commercial real estate markets this year. A whopping 98 percent of respondents indicated their intention to continue to make acquisitions in the sector. However, there has been a pronounced shift toward greater caution, with the share of investors planning to either maintain or increase spending in 2019 falling to 75 percent (from 88 percent in 2018).
“Continued strong real estate fundamentals, combined with historically deep debt and equity capital markets, provide good momentum for 2019, Chris Ludeman, Global President, Capital Markets, CBRE, said in a prepared statement. “Investors are reducing risk and protecting income streams through diversification. Pricing is at or near the previous peak for most asset types in prime locations, so investors are seeking yield in secondary markets and alternative asset types.”
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