DTZ: US Cities Dominate Rankings

CHICAGO—DTZ Research just published its 2015 Annual Outlook, and found that US continues to be the market most favorable for both investors and occupiers. The company examined 60 of the largest occupier markets and 60 of the largest investment markets, and scored 20 apiece from the Americas, the Asia-Pacific region and EMEA on transaction volumes, relative value, market timing and volatility. Seven US cities landed in the top ten investor market rankings and four of the top five occupier markets are located in US. But the firm also expects changes by 2017, when Asian and European cities should provide stiffer challenges to American cities for more of the top spots.

“There is good relative value across most markets, especially in the US which is why they dominate the list,” said Hans Vrensen, global head of research. “However, a new generation of multi-national corporations are challenging the existing business establishment and expanding outside their home cities. Based on these occupier market rankings, second-tier cities will successfully challenge for top ten spots over the next three years and occupiers will benefit from increased competition among cities.”

It's no surprise that New York and London are at the top of the investor market rankings. However, in addition to more European and Asian retail markets competing for the top spots, the firm's researchers expect London will switch with New York and occupy the number one position by 2017. “Asia and Europe provide greater diversity for investors than the US, a factor that will play a larger role in the coming years as macro-economic and market recovery continues to broaden,” the researchers found.

The company attributes the strong overall performance by US cities in the occupier rankings to the nation's “high scores in economic measures including economic diversity, labor productivity and availability of affordable space.” Still, Mumbai beat out all US cities for the top 2014 global occupier ranking, and DTZ believes that Shanghai will ascend to the top spot by 2017, followed by Mumbai and then Tianjin. Occupiers, however, don't seem enchanted with cities from the EMEA region, with only Brussels and Dublin making the top twenty this time around.

“The 2017 ranking confirms our expectations that investors will be able to consider attractive opportunities in a wider range of second tier markets over the next three years,” says Vrensen. “This will be supported by the strong increase in raised capital available to be invested in direct real estate.”