[Editor] This post was created in collaboration with Crowdstreet, one of the leading online real estate investment platforms. Real estate investments are considered ‘local’ which means it is important to follow national trends. Understanding specific market characteristics, however, is critical to making smart investment decisions. Enjoy!
CrowdStreet recently released theirs Best places to invest Report. They determined their top 20 markets across the country by combining both objective metrics:
- growth of population
- Employment base
- local regulations
They also took into account the subjective desirability of the city.
Whether you call this the “mood” or “quality of life” of a subway, CrowdStreet’s top markets have been rated thanks to a curated blend of multiple tangible and intangible attributes that create attractive communities for residents and businesses, all of them serve to create potential investment opportunities for individual investors.
Here are some of their top markets for 2021:
- Salt Lake City
- Tampa-St. Petersburg
- Northern New Jersey
You can Get the full report with all the top 20 markets by creating an account with CrowdStreet today.
CrowdStreet is aware that real estate is local and has unique drivers in each location. Plus, CrowdStreet has classified the top markets according to asset classes such as multi-family, industrial, office and more.
As the pandemic spread, CrowdStreet witnessed a noticeable change in tenant behavior as people migrated to the suburbs from densely populated urban centers in search of larger units and less populated multi-family communities.
The total vacancy rate for multi-family houses in suburbs decreased with a national vacancy rate of 6% in the third quarter of 2020, while the occupancy rate in the city center rose to around 9%. And both sponsors and investors follow the tenants. Urban construction of new apartment buildings recorded the largest decline in 2020 with ~ 50% less than the three-year average.
In the meantime, the proportion of new buildings for suburban multi-family development has increased – according to Newmark, 75.8% of multi-family investments were made outside of the most important metros in 2020.
In ranking their top multi-family stores, CrowdStreet prioritized stores with a friendly business climate, well-educated workforce, affordability, and population growth.
Over the past decade, ecommerce sales have grown at double digits. That growth was only accelerated by the pandemic. The surge in e-commerce sales, which require more floor space than traditional retail, has driven the continued demand for industrial space.
All of these goods need to be stored somewhere, and the packages travel through a complex ecosystem of warehouses, storage facilities, and shipping centers to get from the retailer to your door.
According to Cushman & Wakefield, asking rents for industrial space are expected to continue to rise year-on-year, while Green Street Advisors anticipates the industrial sector (alongside prefabricated houses) will be one of only two types of asset to generate strong net operating income growth ( NOI) in 2021.
Many of CrowdStreet’s major industrial markets are close to large populations and have great access to highways, railways and seaports. Her team also appreciates smaller infill locations in growing metros as the properties are closer to the end user for ease of distribution down the last mile.
At the national level, the rate of office use was exceptionally low at the end of 2020 (below 20% on average) as most office workers were working from home. The cities with the lowest occupancy rates like San Francisco ended the year at a miserable 10%. while other cities like Dallas scored 45%. However, CrowdStreet assumes that offices in the urban core, even in the hardest hit cities, will finally recover by 2025.
The life sciences are a particular bright spot in the office area. Life science real estate focuses on types of work that cannot be done remotely, and the pandemic has helped highlight the essential nature of the work of these tenants, who are often in the biochemical or medical field.
The vacancy level remained low nationwide in 2020 (only 2.4% in key markets such as Cambridge, MA), while rents continued to rise. Many of CrowdStreet’s most popular locations are near key research clusters.
Many of them Top markets currently show strong trends that they believe will lead to sustainable growth over the next decade. However, it is possible that their top markets will change as the recovery progresses. Different metros will rebound at different times and some asset classes will outperform while others struggle. Individual investors must consider both the what and the where at every opportunity to find the right one for them and their portfolios.
When deciding where to invest, take the time to understand market trends and look for trusted sources to get this data.