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According to Real Capital Analytics, interest in the safer investment plays
among office properties has proven stronger than industrial and retail overall.
Office assets have spurred interest from foreign and domestic capital sources,
creating significant competition in primary markets, thus raising costs and forcing some investors to look elsewhere. As a result, many investors are turning to
alternative secondary and third-tier markets for investment opportunities.
Atlanta and its suburbs, along with Kansas City, were cited by GFI Realty’s
Weiser as two other safe bets for investors. He said Kansas City’s job creation
efforts and municipalities are providing quality environments for residents and
investors alike. One of the goals of the Greater Kansas City Chamber of
Commerce is to make it “America’s most entrepreneurial city,” an effort which
seems to be well underway, when combined with its Google Fiber initiative.
Missouri offers economic incentives, and The Missouri Partnership, the
Economic Development Corp. of Kansas City and the Kansas City Area
Development Council all assist companies with relocation.
Weiser also mentioned quality of life as important, with traffic concerns near
the top of the list for investment decisions. Those types of 18-hour cities with
mixed-use developments and manageable traffic are finding favor with investors. Both Charlotte, NC and Charleston, SC are good bets, although the former has less job growth than the latter, Weiser observes.
He mentioned the fact that South Florida will always be attractive, although
there is approximately 45 months of condo supply there and concern about the
effect on rentals. Weiser called out the circa-1980s and 1990s well-built condos in
the high-$100,000s per-door as examples of good investment buys there.
All in all, mid-market plays are getting attention in a variety of ways, whether
for population counts, job growth, geography, fewer traffic snarls or business
initiatives. In the big scheme of things, if the investment pencils, it doesn’t matter where it’s located or how it is defined. ◆
“There can be good deals and bad
deals in every market. When we
consider where we want to focus
capital, we look at deal flow and
the ownership story behind it.
We’re picky about the story.”