The Race for the Next Seattle – The Property Chronicle
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The Race for the Next Seattle

Head Of Research

(Article originally published Summer 2018)

Why agility is key for investors in dealing with new uncertainties

Seattle is the only market I’ve ever seen advance from secondary to primary market status. There are a few other secondary cities that are nipping at its heels, led by Austin, Denver and Nashville in the U.S., and Sao Paolo, Brazil and Montreal, Canada in the Americas. Other cities that are clawing their way to the top include Tampa, Phoenix, Las Vegas, Minneapolis and Bogota, Colombia.

Last year had the lowest overall CRE investment returns since the Global Financial Crisis, with NCREIF reporting a 7% overall return and only industrial, at 13%, exceeding its historic return average. Given the declining return environment, it is no surprise that our soon-to-be-released Americas Investor Intentions Survey 2018 reveals that investors on this side of the Atlantic are racing to find the next Seattle by increasing their focus on the higher-yield potential of high-growth secondary markets. According to the survey, investors are also moving further out on the risk spectrum to look for more opportunistic equity deals.

Markets like Tampa Bay, Nashville, Montreal and Portland all rose substantially in investor interest this year, not only for their superior current yields (higher cap rates) than the majors, but for the single most important factor of 

all: higher projected office-using job growth. Investing in markets with the fastest job growth may not only lead to greater NOI growth but to additional cap rate compression even in a rising interest rate environment. The investors we surveyed clearly agree with this assessment, as “strong economic fundamentals driving rental value growth” grew in preference by 47% of surveyed investors in 2018 from 18% in 2017.






Head Of Research

About Spencer Levy

Spencer Levy

Spencer Levy is Americas Head of Research and Senior Economic Advisor for CBRE. In this role, Spencer is part of the global team setting Research strategy for the company, leads a team of more than 350 professionals in the Americas, and is the chief spokesperson for CBRE in the Americas on economic issues. He is a regular speaker on national television, including CNBC, Fox Business & Bloomberg, as well as being an actively quoted economist in the print media. Spencer is a 22-year veteran of the commercial real estate industry as a lawyer, investment banker, capital markets leader and researcher. He is a graduate of Cornell University and Harvard Law School.

Articles by Spencer Levy

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