US Investors look to Secondary Markets

Posted on 15 November, 2013 by Jodee Redmond

According to forecasters, the US recovery will continue into next year and investors will look beyond the traditional markets into secondary ones to get higher yields. The report was co-published by PwC US and the Urban Land Institute (ULI).

San Francisco’s thriving economy is attracting investment

The growth in secondary markets is being driven by investors looking for returns as opportunities in core markets are becoming more challenging to find. The report indicates that a number of investors may be expanding their horizons beyond large, established markets like Boston, Chicago, Los Angeles, New York City, San Francisco, and Washington.

Top 5 Markets to Watch

The survey revealed the following cities as being the leading markets to watch:

1. San Francisco: This market holds the top-ranked spot for the second year in a row due to its thriving economy and solid projected job growth rate of two per cent.

2. Houston: This city jumped from its 35 ranking last year to the second-place slot. Investors are interested in its investment and development prospects.

3. San Jose: This market’s ranking is unchanged from last year, and investors are attracted to the prospects offered by its technology industry. Survey respondents believe that the city’s active technology sector will lead to a growing demand for real estate.

4. New York: The Big Apple dropped two places to take fourth spot in this year’s survey. Its investment and development opportunities are still rated as “good,” but there is concern that prices are becoming too high. Industrial and distribution properties are most recommended as the types to buy in this year’s survey.

5. Dallas/Fort Worth: Dallas/Fort Worth moved up by four spots to take number 5 in the 2014 survey. The respondents rated it high for investment and development because of the economic stability provided by its association with the federal government. The city’s strong house building prospects helped to move it up in this year’s survey.

Industrial properties were at the top of the ranking in this year’s report and warehousing stood out as a particularly strong sector as well. A total of 64 per cent of respondents made a “buy” recommendation for this sub-sector.

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