Smaller U.S. cities displace their larger counterparts in commercial property investment
Smaller U.S. cities draw the attention of commercial property investors, says report
With relatively smaller cities drawing the attention of big investors, the commercial property investment scenario in the U.S. is changing fast, a trend that is expected to continue in future. There seems to be a big shift in the way large businesses are seeing smaller cities such as Seattle, Austin and Salt Lake City. This perception change on part of the big investors, which typically include banks, pension funds, labour unions, and insurance companies, is delivering great for these yet-unexplored cities, which had experienced only limited economic growth till now.
But, as it emerged from the report, things are changing rapidly in these cities because of the changing employment scenario. As young and qualified professionals populate these cities, they offer great potential for bigwigs across commercial sectors to have a presence in these cities. The change in commercial landscape of these cities is credited to the young population of professionals who are qualified and looking to work.
Patrick Phillips, ULI Global CEO says that the trend of smaller cities displacing the bigger ones in terms of investment is changing the urban scenario across the country. He says that these smaller cities are proving to be highly competitive in terms of livability, employment offerings, and recreational and cultural amenities.
The report co-author Mitch Roschelle said that factors working in favour of smaller cities include relative affordability, concentration of skilled workers, diverse and robust economies. The low cost of doing business in these second-tier cities in terms of investment, makes them desirable to investors.
Among these commercially-growing cities, Utah, the capital city of Salt Lake occupies the third spot, according to the report by the financial services provider PricewaterhouseCoopers and the Urban Land Institute in the “Emerging Trends in Real Estate 2018” report released Thursday.
The city entered the list of top 10 for the first time. With cost of doing business in Salt Lake City lower than the national average of 12 per cent, it has emerged as one of the favourable options for commercial property investors. Moreover, Salt Lake City’s reputation for economic vitality has helped make it a sought-after locale for larger capital investors, said a local analyst. The arrival of employers on large scale has meant more demand for space, resulting in driving the rents up. All these are the exact ingredients any city requires to grow and expand its economy.
Till now, Utah has been a city with only local appeal, apart from some investments from California, said Eli Mills, senior vice president and investment specialist for the Salt Lake office of commercial real estate firm CBRE. But, the trend has changed significantly over the past three years and a number of institutional buyers and investors from outside the state are investing in the city. All these developments have turned Utah from a local city to a national and global city where investors are increasingly willing to invest.