The commercial real estate market is seeing a substantial recovery, but it is doing much better in some areas than others. Where the economy is doing best, so are multifamily property performance and investment returns. So where are the indicators suggesting to invest today?
There are three main drivers in the economy today which predict where the best returns lay at.
The first is talent, and in particular top tech talent. This is the group that is starting new small businesses which is traditionally responsible for almost half of all job creation. The professionals are currently flocking to a few huddles around the country where the entrepreneurial spirit is strongest. According to a new CBRE Group rating places the Boston area as one of the top five of these hot spots with high concentrations of top tech talent.
However, contrary to popular misconception these talented individuals, and startups aren’t self-sufficient and don’t succeed autonomously. In fact, recent surveys have revealed that one of the most important factors for new business success and growing business hubs like Silicon Valley is actually the presence of existing, established businesses. These two ends of the spectrum work together and help pull each other up. New startups need the spend going on to take off and access to capital. Established giants need access to great talent to grow and new tangents to invest in to leverage growth they cannot harness under their own umbrellas.
At the same time affordability is also a driving factor in the market. Lean companies and budgets demand affordable housing for staff and premises. Both individuals are being more frugal and demanding wider gaps in income and profitability than before. Most aren’t finding this, if any property at all in hot centers like downtown Boston. And investors are definitely demanding better deals with wider spreads.
This all points to the Worcester, Massachusetts multifamily property market as one of the most well primed commercial property markets in the U.S. for investment.
The above factors don’t just point to ripe markets now either. The boost these elements provide to local economies will also keep them affordable for both residential and commercial tenants thanks to wage growth, even as the cost of living rises. In other words areas like Worcester will also provide the most room for price growth and rent rises, while rental vacancies remain low. According to the most recent CCIM Market Trends report the best rent growth is yet to come between now and the end of 2014.
There are great investment property acquisitions to be made in Worcester, MA today. With the help of a great property management company, you can make multifamily properties with high potential into great investments and reposition properties to attract these tech professionals and continually drive up total returns over time.