Secondary Markets Heating Up for Commercial Investors

By Jennifer Quinn

Florida Realtors economist: Investors are following renters into the suburban spillover markets. Strong demographics, population growth and an expected recovery in hospitality pulled the Tampa- St. Pete, Miami and Orlando markets into the top 20.

ORLANDO, Fla – The CrowdStreet Investment team leveraged several resources in commercial real estate to determine the top market rankings for 2021. Strong demographics, population growth and an expected recovery in hospitality pulled the Tampa- St. Pete, Miami and Orlando markets into the top 20.

CrowdStreet’s top 20 best places to invest

1. Raleigh-Durham

2. Austin

3. Phoenix

4. Salt Lake City

5. Dallas-Fort Worth

6. Nashville

7. Boston

8. Tampa-St. Petersburg

9. Atlanta

10. Boise

11. Charlotte

12. Washington, D.C.

13. Denver

14. Seattle-Tacoma

15. San Francisco-Oakland

16. Miami

17. Indianapolis

18. Orlando

19. Northern New Jersey

20. Inland Empire

Multifamily investors in particular should note the smaller-sized cities renters have been favoring over the past year, leaving behind their pricey urban centers and coastal cities for suburban locales, the Sun Belt and secondary gateway cities.

Like their larger counterparts, smaller cities’ multifamily fundamentals remained relatively stable thanks to government stimulus and eviction moratoriums that kept rent collections near pre-COVID levels. Collections never dropped below 93% in 2020, according to the National Multifamily Housing Council, helping to push vacancy rates for suburban multifamily product lower (to 6%) and downtown vacancy higher (to 9%).

Cape Coral-Fort Myers emerged as a strong market for the Build-to-Rent product, which is currently a solid? asset type throughout the country. Overall, these communities have a strong outlook, fueled by the current tenant migratory trend that has been opting out of smaller, denser urban housing in favor of larger, less-dense housing options.

Millennials are a driving force behind this trend. They’re looking for more space as they contemplate a post-pandemic world where they still work from home for a portion of the week.

Still, this demographic doesn’t want to leave the amenities of urban living behind. They look to Build-to-Rent communities as a way to have the best of both worlds – the space of a single-family home without the isolation that comes from a typical suburban location. Markets with less land constraints, like Cape Coal-Fort Myers, fit the bill at this product type typically requires three to four times as much space as the standard garden-style multifamily property.

Orlando continues to top the list for retail and hospitality investment despite the challenges these sectors have faced this past year. The fundamentals in place that made Orlando desirable prior to the pandemic persist, and indications of a recovery will set the area back on track for a strong recovery for these asset types.

For the detailed report, visit crowdstreet.com.

Jennifer Quinn is an economist and Director of Economic Development

Source: Crowdstreet.com

© 2021 Florida Realtors® Reprinted with permission.

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