The steady economic recovery for the area of commercial real estate appears likely to continue and that means increased visibility for secondary markets such as Houston. Investors looking for new opportunities for their portfolios to bring them profit are seeking potential beyond the core markets of cities such as Boston, Chicago, San Francisco and New York.
With increasing access to debt and equity financing and improvements in economic viability in smaller areas, the risk to return potential of these areas are becoming more appealing to investors. Because of this appeal, investors are beginning to look to cities such as Houston, which has recently moved into the number two spot on a survey of the markets to watch conducted by the Urban Land Institute (http://uli.org/press-release/
According to the information published in this article, Houston’s investment prospects, growth in non-residential construction and renewed interest in exploration industries are key forces driving the increased economic possibilities for commercial properties. Those in the Houston area with such properties can be more optimistic about the potential for their own profits as their market grows in economic viability. With the current popularity for city living and compact development, Houston’s downtown properties may see a revival in profit as well.
One area which may pose a potential downside is the concern over rising interest rates. The Urban Land Institute’s Emerging Trends report does predict a short-term increase in interest rates but believes it will be one small enough to cause little disruption to the economic recovery. They feel any increased costs will be offset by increased demand, which brings the potential for higher rents. This balance keeps them optimistic about the increased earning potential for commercial properties in these secondary markets.
If you are interested in finding out more about the potential of your commercial property, please contact us.