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CHICAGO-Jones Lang LaSalle Hotels announced what they consider the leading markets for hotel investment. The “hidden-gem” cities represent lesser-known markets which offer strong hotel investment opportunities, a market that has gained interest in the commercial real estate market.

“We’ve done extensive research to find markets that are untouched or have great potential for future development,” Kristina Paider, senior vice president of marketing and research for the local firm, tells GlobeSt.com. “These areas have shown terrific investment potential.”

Paider adds that there is “no specific blend of elements that each market shares, as future growth is projected from a multitude of dynamic components.” However, she says, each market exhibits specific characteristics and developments which draw on the future trends of the lodging industry, propelling them from the sidelines onto the mainstream playing field. “These less obvious markets offer the potential for lucrative return.”

The top ten cities are: Calgary, Canada; Charleston, SC; Jacksonville, FL; Kauai, HI; Mammoth Mountain, CA; Monterrey, Mexico; Portland, OR; Sacramento, CA; Savannah, GA; and Scottsdale, AZ.

“Markets such as New York, San Francisco, Chicago, Washington, DC and Los Angeles represent the ‘usual suspects’ for lodging investment, as they encompass the infrastructure, product and strong demand generators necessary to attract hotel investors and their capital,” says Arthur Adler, managing director of the Americas for Jones Lang LaSalle Hotels in New York City. “However, cap rates and longer-term yields have been driven down in these markets due to strong market fundamentals, significant investor interest and a general lack of product. The hidden gem markets offer investors the opportunity to earn a favorable risk adjusted return, potentially with less competition for assets.”

Jones Lang LaSalle also points out that there is a widened gap between luxury/upscale properties and budget. “As upper tier properties reach for higher star ratings, they’ve left a gap for the lower-priced properties in the mid-scale and select service sector,” says Adam McGaughy, senior vice president. “More companies are entering into urban gateway markets.”In 2005, Jones Lang LaSalle Hotels sold 32,049 hotel rooms in value of $7.9 billion in 72 cities, which represents an increase of 52% on the value of transactions in 2004.

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