The Top Cities Showing Commercial Real Estate Growth

The Emerging Trends in Real Estate report released in 2012 by PwC US and the Urban Land Institute (ULI) showed that the best growth that can be expected to occur this year in commercial real estate will be largely confined the urban areas that are “24-hour” cities, with multiple transportation hubs and global access from these hubs.   

The continuing economic slump and the slowed job growth rate continues to bog the real estate markets down, and consumer spending is keeping retailers conservative in their leasing and purchasing.  According to Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC, “Job creation is clearly the critical ingredient for a sustained recovery in commercial real estate and the market participants we surveyed uniformly struggled to identify new employment engines. As a result, businesses are focused on squeezing profitability out of productivity gains, and families forced into belt-tightening are using less square footage, which follows ‘The Era of Less’ sentiment we forecasted last year.” He continues to explain, “In 2012, investors expect pricing to level off in the top markets – and overall ‘buy’ sentiment will subside, selling appetites will increase, and more owners will hold until the economy untracks. This is part of 'the new normal' as investors are coming to grips that they may not be selling for more than they paid.”

What this means is that there will likely be an increase in properties for sale in most areas across the nation, but buyer demand will slow in many of them due to continued economic uncertainty until the market levels off.  The report, however, did list 10 cities to watch as the Top 10 for expected growth in the commercial real estate sector.  These include Washington, D.C.; Austin, TX; San Francisco, CA; New York City, NY; Boston, MA; Seattle, WA; San Jose, CA; Houston, TX; Los Angeles, CA; and San Diego, CA. 

Why You Should Have A Commercial Real Estate Broker?

In addition to saving you money and helping you find the property that is the best fit for you, a commercial real estate broker will provide several benefits that you simply wouldn’t have otherwise.  Below is a list of some of the top benefits to having a commercial real estate broker in your corner before signing a lease.

They know the area and key people within it.  A commercial real estate broker not only knows the area extensively, but is usually “networked in” to have access to some of the best deals first. 

They will work for you – not the owner.  When you go through the owner or seller’s representative or agent, that person will make every attempt to steer you toward their employer’s property, since that is what they are paid to do and that is where their commission lies.  When you hire a commercial real estate broker, he or she will be focused on matching you with a property that best fits your needs.  

They can disclose information to you that other agents can't.  When you go through the seller's or owner's agent, that agent might be instructed not to disclose certain information such as prior transaction data.  

They can help you avoid a conflict of interest.  Although a listing agent might agree to show you properties other than the ones they have listed, they would have a strong ulterior motive for steering you away from those properties because they wouldn’t get as large of a commission.

They can make the entire process less stressful.  Finding the right commercial real estate property is a stressful situation, especially considering the amount of time it takes to locate and view the properties that are available.  When you hire a commercial real estate broker, he or she will not only have experience and an established network within the industry – your broker will also be looking out for your best interest.    

Why should i hire a commercial real estate broker when seeking to purchase or lease a property?

Atlanta’s Commercial Real Estate Market Is Still Among The Best In The Country

Besides being Georgia’s capital and the 9th most populous city in the United States, Atlanta is a commercial hub that is unparalleled by any other city in the country.  It is the home of the world’s busiest airport and more than 75 percent of the Fortune 1,000 companies, which means that the commercial real estate market within the city suffered less than most other cities in a down-turned economy and has bounced back faster.  In fact, within the last 10 years, Atlanta has continued to grow to such an extent that it has become the second fastest growing metropolitan area in the United States.   

In addition to this, Georgia has held a solid reputation of being a “pro-business” state.  Through incentive programs on both the local and state level, many Fortune 1,000 companies have moved their headquarters to Atlanta—companies such as The Coca-Cola Company, Home Depot, United Parcel Service, Delta Air Lines, AT&T Mobility, and Newell Rubbermaid, to name a few. Other companies have followed suit, such as Arby's, Chick-fil-A, Earthlink, Equifax, First Data, Foundation Financial Group, Gentiva Health Services, Georgia-Pacific, NCR, Oxford Industries, RaceTrac Petroleum, Southern Company, SunTrust Banks, Mirant, and Waffle House.

Because of the enormous commercial potential the city holds, the Atlanta commercial market contains approximately 1,051,675,654 square feet of office, industrial, and retail space, with approximately 14.17 percent vacancy.  Since the city is known as one that is extremely economical for conducting business, it was ranked 3rd by KPMG’s “Top Cities With Tax Structures Favorable to Business” (2008) and 4th in Forbes “Best Cities for Jobs in 2008.”

Although Atlanta’s commercial real estate market suffered with the rest of the country during the recent economic downturn, is has remained one of the top places in the nation to grow and run a business.  This is why business owners continue to flock to the city to develop and expand their businesses, and why job seekers continue to find an ample job market within the city compared to other parts of the country. 

How do i find success in the field of commercial real estate?

Relationships are Crucial in Commercial Real Estate Deals

Beyond “big picture” perspective and patience, the relationships you build will be equally as important in establishing yourself as a successful commercial real estate investor or broker.  Within commercial real estate deals, you will be meeting a lot of different people with varying personalities, and the way you connect with those people and negotiate successfully with them might mean the difference between your success or failure as an investor.  It is also important to keep in mind that the more people you know, the more information you have at your fingertips.  Along with close relationships come unique opportunities to be first in line for great investment properties.  

In addition to the unique opportunities they provide, the relationships you form in commercial real estate deals will not only help you find the deals – they will help you close the deals.  Whether this is through partnering with a private lender or having the right connections to get tough questions answered, your relationships with others in the industry who facilitate the deal will be crucial to your success.  

When you surround yourself with trusted experts and associates who watch the market, are aware of trends, and know the area, you are surrounding yourself with an environment that enables you to do what you need to do to navigate the often confusing and tricky world of real estateinvesting.  Especially when you are buying commercial real estate, there might be laws or ordinances within the area that will affect your bottom line.  Knowing trusted advisors in all fields connected with the real estate industry (which can range from construction and engineering to political and insurance risk) will be your greatest asset as a commercial real estate investor.

Perspective and Patience are Key to Commercial Real Estate Investing

With the right mix of perspective and patience, investing in commercial real estate can be a successful venture, even in a lagging economy. Most experts agree that research is your most valuable tool as a real estate investor, but beyond research, you will need a “big picture” perspective of your investing goals and of what is available on the market.  

This perspective that’s needed includes thinking big from the offset.  If you bother with going through all the necessary red tape in getting a commercial real estate loan, you should keep in mind the scope of what you intend to do.  Dave Lindahl, real estate investment coach and author of Massive Passive Income Creator: Dave Lindahl’s Fast-Track System for Real Estate Profits, states, "It's no harder to manage 50 units than it is 10." Sometimes, thinking big might seem like a gamble, but if you crunch the numbers enough, you might find that it isn’t nearly the gamble it appears to be.  In fact, thinking big might save you money in the long-run. 

Patience is a necessary quality for a successful commercial real estate investor to have, as well.  Commercial deals take longer than deals on single-family houses, and there are considerations concerning renovations that must meet additional commercial guidelines.  For this reason, if you are investing in commercial real estate, consider doing so as a plan for retirement rather than a get rich quick scheme.  Rarely do commercial real estate ventures earn a lot of cash on the front end; rather, they require patience and an understanding of the time and effort that will be involved in making your commercial real estate purchase a profitable one.  

Another part of this patience is to understand the amount of time that you will spend looking for commercial properties, screening good deals from bad ones, and completing the offer process.  While there is definitely a learning curve, and you learn as you go, these are generally processes that take considerable time on the front end.