With a healthy gross domestic product and continued job growth,
real estate executives remain bullish on the Los Angeles commercial
real estate market.
Shekhter. the commercial real estate investment
has announced that for the third year in a row the city of Los
Angeles, CA, has ranked as the most commercial real estate market
for the entire Western Hemisphere.
CBRE surveyed more than 300 real estate investors and gathered
their feelings about the market across North America and, in
particular, Los Angeles. The real estate investment firm asked them
to rank the cities in the U.S. in terms of desirability for
According to the head of CBRE's research department, Spencer Levy,
the biggest cities like Los Angeles and New York still ranked the
highest on the scale of desirability according to survey takers.
Despite this, some smaller markets showed signs of
improvement, Neil Shekhter points out.
Dallas, Texas, for example came in second, even ahead of New York.
Seattle showed up in a tie with New York and San Francisco and
Houston also tied for fifth place in the survey. These two cities
were followed by Atlanta and Washington, with Denver coming in
eighth. Miami showed up ninth and then there was another tie for
tenth place with Portland, Nashville and Boston.
As for the reasons why these cities were ranked and why Los Angeles
came in at the top, it comes down to economic growth and tax cuts.
There were other factors, such as regulatory changes that created a
more favorable commercial real estate market overall, according
to Neil Shekhter, founder, and CEO of Santa
Interestingly, interest rates might be higher in these cities, such
as Los Angeles, 96 percent of the investors polled indicated they
were still ready to invest in real estate in the coming year, 2018.
In fact, the study showed that 45 percent of those called wanted to
increase the real estate acquired in 2018, compared to their
investment level in 2017.
Americans surveyed also indicated they were expecting strong
returns on their investments in areas like Los Angeles and New
York. Real estate investors said they were expecting unlevered
returns will range from 6 to 9 percent. A significant percentage
are anticipating returns even higher than that in
2018, Neil Shekhter notes.
Despite this positive feeling, Levy has cautious word for
investors. In fact, he recommends they remain agile in their
investment portfolio. In fact, Levy stated, ''capital structure
needs to be agile in debt by considering longer-term paper, which
is what our Debt & Structured Finance professionals are
advising today. For equity capital structure, investors need to
consider lowering their cost of capital if they are going to stay
in the same markets/asset classes.''