CBRE Sees Domestic Energy Production Boom Enhancing Office Investment opportunities #CRE

CBRE‘s “13 Trends for 2013” Report Also Sees Aging Population Driving Multi-Housing Investment and Growing E-Commerce Transforming Supply Chains

Los Angeles, February 20, 2013 – The increase in domestic energy exploration and production will spur office investment opportunities in U.S. markets like Dallas, Pittsburgh and Oklahoma City; the transformation of the supply chain by e-commerce will accelerate changes in distribution facilities and locations; and an aging population will significantly drive apartment rental demand during this decade. Those are among the key real estate trends that CBRE has identified in a new report, “13 Trends for 2013.”

The CBRE report notes that most of the top energy markets in the U.S. are seeing employment growth, particularly in office-using sectors. These markets, including Dallas, Oklahoma City and Pittsburgh, offer opportunities for investors willing to venture outside of traditional gateway markets, with office valuations well below the national average.

2013 will also be a year during which companies will move goods from their store shelves back to warehouses at an increasing rate. As this trend expands, the nation’s supply chain will be transformed, significantly affecting industrial and retail real estate. Distribution markets where the share of distribution-specific stock is greater than the national average, such as Dallas and Riverside, are at the center of the nation’s supply chain because they have the right mix of infrastructure to justify the construction of large intermodal distribution facilities.

Wider availability of affordable, longer-term rental opportunities for senior citizens could help unlock more demand for multi-housing properties and lead to higher rents. Multi-housing investors and developers should not underestimate the potential contribution of an aging population to future growth in rental demand. Growth in the population aged 65 and above is so strong that even with a traditionally high homeownership rate, the group is likely to contribute more to net growth in rental demand during this decade than households under the age of 35.

“While the slow but steady economic recovery portends positive trends for the U.S. commercial real estate market, owners, occupiers and investors still need sharp insight to make the right decisions and ‘13 trends for 2013’ offers a practical, sector by sector, analysis,” said Jon Southard, Director of Forecasting, CBRE Econometric Advisors.

According to CBRE other key trends for 2013 are:

  • Cap rates will remain relatively unchanged in 2013, as a result of loose Fed monetary policy, the continuing recovery in both debt availability and real estate fundamentals, and stability in risk premiums.
  • The outlook for manufacturing remains healthy as the U.S. economy continues to gain traction, with industrial production forecast to reach its pre-recession high by the end of 2013. Continued improvement in business and consumer demand will see more need for industrial space throughout the entire supply chain. Higher levels of production will drive manufacturing businesses to expand their access to warehouse space.
  • The property pricing gap between suburban office assets and downtown properties will narrow. There are early signs that spreads are narrowing, first through near-term stabilization of cap rates in the suburbs, and then in later years through compression. During 2013 and 2014, investors will gradually increase their risk appetite and venture beyond cities’ central urban core.

Note to editors/journalists: For a full copy of the report email robert.mcgrath@cbre.com

 

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