The Top Cities for CRE Investment
The top-ranking places enjoy strong job and population growth and tend to have major research universities, burgeoning tech sectors, and a vibrant cultural scene.
Austin is the best market for commercial real estate investing, according to a new survey from investment marketplace CrowdStreet. The Texas hotspot is followed by Raleigh-Durham, Nashville, Orlando and Seattle.
The top-ranking places enjoy strong job and population growth, according to CrowdStreet, and tend to have major research universities, burgeoning tech sectors, and a vibrant cultural scene. And that helps those cities create “ecosystems that ultimately boost absorption rates, rent growth and the local economy,” CrowdStreet notes.
“We take all property types into account since the deals on our platform cover private real estate opportunities in all multifamily and commercial real estate sectors. But to make the top 20, a market must consistently rank highly across multiple real estate classes,” CrowdStreet’s Chief Investment Officer Ian Formigle said of the analysis.
Austin finished second in 2021 and benefited this year from strong in-migration patterns, particularly from pricier coastal tech sectors like Silicon Valley. Its population surged by 21% over the last decade, driven by corporate relocations from companies like Tesla, Orale, and Google. The metro also outperforms much larger cities in the build-to-rent, retail, office and multifamily markets as well and finished first, second, second and third respectively in those sectors.
Raleigh-Durham was the number one pick in 2021 and has posted 23% population growth over the past decade, making it the second fastest growing metro area after Austin. It is also the nation’s top multifamily housing market, according to CrowdStreet.
Number three Nashville is the nation’s top real estate market for office space, while number four Orlando jumped 14 spots from 2021 and has enjoyed surging multifamily demand.
The firm also predicts that the industrial and life sciences sectors should continue to provide promising investment opportunities: “Real estate investors have been enamored with two property sectors that have seen accelerated—and exponential—growth thanks to the pandemic: life sciences with its medical office buildings, research labs and biotech facilities and industrial, which includes warehouses and distribution centers,” according to CrowdStreet. “While the Best Places to Invest in life sciences list did not change between 2021 and 2022, fundamentals have changed substantially in the industrial sector. A combination of razor-thin vacancy, robust rent growth and above-average barriers to entry (both administrative and geographical) helped cement the top rankings in industrial markets for 2022.”
CrowdStreet’s top industrial markets were Los Angeles, Orange County, Seattle, the Inland Empire, and San Francisco-Oakland.