34 Medium-Size Metro Areas Could See Potential Boost in Commercial Real Estate Investment


New NAIOP Research Foundation Report Shows Investment in 2014 and Beyond

WASHINGTON, D.C. – February 21, 2014 – (RealEstateRama) — A new report released by the NAIOP Research Foundation suggests that commercial real estate investment and sales activity could begin to pick up in the coming year in many of America’s medium-sized metropolitan areas (so-called “secondary markets”). Based on healing economic conditions, improving investor confidence and the availability of financing, the report forecasts a general rebound in an industry that contributes billions of dollars to local revenues and helps support thousands of local jobs. A complete list of the metro areas is below.

“The economy is recovering, and we’ve seen an increase in commercial real estate sales, leasing and development activity in primary markets like New York, Miami and Los Angeles.  If this report and history are a guide, we will likely see this trend start to take hold in secondary markets; in places like Columbus, Kansas City, Tampa Bay, Austin and other medium size metropolitan areas.  If that happens, it will be a real positive sign that our industry is feeling better about the economy and investment opportunities, and it will be good news for lots of medium-sized American cities.  One cloud on the horizon is whether the Congress will renew an important tool that’s needed for this investment to happen, which is insurance against terrorist attacks on commercial properties,” said Thomas Bisacquino, President and CEO of NAIOP, the Commercial Real Estate Development Association.

The report, authored by Sam Chandan, president and chief economist with Chandan Economics in New York, is full of interesting information and statistics about a host of U.S. cities and is an excellent reference document for economic and business writers alike.

While the continued availability of financing and low yields on bonds has sparked lender and investor interest, the fiscal health of a city plays a much greater role in medium-sized market growth compared to large metropolitan areas. Local governments with weak long-term budget positions and large unfunded pension liabilities can chill investor interest in a city.

The report also warns investors to watch out for the “one-industry town,” saying a diverse job market is essential for growth of medium-sized markets. Despite a falling unemployment rate, the need for a large number of diversified, skilled workers in a city with a history of innovation is key for investors who are motivated by a market’s long-term prospect for growth.

Since recovery in medium-sized markets lags the pace of larger cities, the continued growth in the commercial real estate sector and historic trends means 2014 could be very positive in many communities.

This report is an overview of the secondary market investment landscape. The report surveys patterns of market performance and relationships can inform investors’ evaluations of market opportunities in secondary markets.

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List of Secondary Markets

Austin-Round Rock-San Marcos, Texas
Baltimore-Towson, Md.
Charlotte-Gaston-Rock Hill, N.C./S.C.
Cincinnati-Middletown, Ohio/Kent./Ind.
Cleveland-Elyria-Mentor, Ohio
Columbus, Ohio
Detroit-Warren-Livonia, Mich.
Greensboro-High Point, N.C.
Hartford-West Hartford-East Hartford, Conn.
Indianapolis-Carmel, Ind.
Jacksonville, Fla.
Kansas City, Mo./Kan.
Las Vegas-Paradise, Nev.
Louisville-Jefferson County, Kent./Ind.
Memphis, Tenn./Miss./Ark.
Milwaukee-Waukesha-West Allis, Wis.
Minneapolis-St. Paul-Bloomington, Minn./Wis.
Nashville-Davidson-Murfreesboro-Franklin, Tenn.
New Orleans-Metairie-Kenner, La.
Oklahoma City, Okla.
Orlando-Kissimmee-Sanford, Fla.
Philadelphia-Camden-Wilmington, Pa./N.J./Del./Md.
Phoenix-Mesa-Glendale, Ariz.
Pittsburgh, Pa.
Portland-Vancouver-Hillsboro, Ore./Wash.
Providence-New Bedford-Fall River, R.I./Mass.
Raleigh-Cary, N.C.
Sacramento-Arden-Arcade-Roseville, Calif.
Salt Lake City, Utah.
San Antonio-New Braunfels, Texas
St. Louis, Mo./Ill.
Tampa-St. Petersburg-Clearwater, Fla.
Virginia Beach-Norfolk-Newport News, Va./N.C.

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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 15,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.

Kathryn Hamilton

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