Here’s where Phoenix ranks among best places to invest in real estate
As we near 2021, the US commercial real estate (CRE) market is poised to move past its 2020 low and enter a new cycle of growth. Thanks to a reported 3.8% increase in GDP and the mass distribution of COVID-19 vaccines, the recovery comes with expectations of faster transaction speeds – nearly 40% more US CRE transactions for next year in mid-2020, according to the CBRE report . In this new cycle, certain asset classes such as industrials will outperform while other asset classes, particularly retail and hospitality, are likely to underperform. Different metros will recover at different rates as well, and we weighted regional factors like population growth, employment base, etc. more heavily when we identified the best real estate investment opportunities in 2021. CrowdStreet’s most popular markets also showed a subjective desire or competitive advantage.
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Regardless of whether we call this the “mood” or “quality of life” of a subway, CrowdStreet’s top markets have a curated mix of several material and immaterial attributes that come together to form attractive communities. As our country looks to resume growth, we are watching many of the growing secondary markets that we appreciated before the pandemic. But with a twist after COVID, we are expanding this list to include selected markets in the mountain region.
The CrowdStreet Investments team used the following sources of information to determine our top market rankings for 2021:
1. Green Street consultant
3. ULI Emerging Trends in Real Estate
4. CrowdStreet Marketplace portfolio analysis
5. Experience of the CrowdStreet Investments team
6. Interviews with experts in the real estate industry (operators, capital market experts, brokers, etc.)
The best places to invest in real estate in 2021
Raleigh-Durham, our clear No. 1 market for 2021, ranks 3rd or better in four strategies. With its proximity to top universities, world-class research facilities, a highly skilled workforce, relative affordability and an increasingly walkable urban center, there are far too optimistic markets about the future of Raleigh-Durham, arguably one of the hottest things to do in the country.
Austin is a market with an unfair number of competitive advantages. Strong population and employment growth (with a flourishing tech scene), the presence of the state capital, a large research university and the location in a tax-free state all offer a strong long-term outlook.
Phoenix is our top market in the west and one of the best places to invest in real estate. A 2020 exodus from urban CA locations has already supported strong fundamentals. Arizona also ranked 5th for incoming moves in United Van Lines’ 2020 annual relocation study.
4. Salt Lake City
Constant population growth, low unemployment and scarce vacancies are characteristics of this market for several years. Salt Lake City is maturing and becoming more institutional.
5. Dallas-Fort Worth
Dallas-Fort Worth is a technically unrestricted market that continues to open up new growth areas through new developments. Constant growth, a business-friendly central location and a favorable tax environment form the basis for multi-family and industrial strategies.
Nashville is one of our top markets from a 10-year growth perspective. COVID-19 may have harmed its tourism sector in 2020, but with a major expansion to the airport slated to open in 2023, including new direct flights to and from Europe, it is poised to recover and set a record level of visitors to reach. Multi-family rents continue to rise by 4% year on year.
The life sciences are groundbreaking for Boston, but it’s also a solid industrial and multi-family market. The university cluster is # 1 in the world, creating a concentration of intellectual capital that serves as a strategic asset for Boston.
8. Tampa-St. Petersburg
With strong population growth, no state income tax, a business-friendly environment, affordability, and a Sunbelt location in Tampa-St. Petersburg is an attractive market for almost all asset classes.
Atlanta is home to the world’s busiest airport and on the move. With a large population, the highest concentration of colleges and universities in the Southeast, and a well-educated workforce, Atlanta may still be classified as a secondary market, but it is well on its way to attaining primary market status.
Boise is a leader in year-over-year residential real estate appreciation, hitting 20.1% in 2020. The California to Idaho move is in full swing and Boise is facing strong growth across all asset classes. Boise is a hidden gem and is not currently an institutional market. However, we believe it will later this decade.
Charlotte is a banking powerhouse. It also has a total of nine Fortune 500 headquarters, including Honeywell, Nucor, and Duke Energy. Charlotte is the epitome of CrowdStreet’s 18-hour city market, with above-average population and employment growth rates, yet relatively affordable. This makes Charlotte our third favorite market for multi-family acquisitions.
12. Washington, DC
With a new government, we expect the federal government to grow, and after vaccination, we expect DC to resume its busy operations quickly. DC is also one of the most liquid markets in the world, which will attract large institutional investment as the new cycle progresses.
Like Boise, the Denver real estate market is on fire, setting the all-time record for average prices this year. As a growing 18-hour city, we like most of the strategies in this market, but rising property prices mean that we rate multi-family and rental housing developments as our favorites.
In an Amazon-dominated world, it’s hard not to like the city where Amazon’s headquarters are located, let alone the home of Microsoft, Starbucks, and Costco Wholesale. Seattle is about to transition from secondary to primary market status.
15. San Francisco-Oakland
San Francisco was a top city for core brain drain in 2020. Apartment rents fell by up to 20% from their peak. However, with the disorder comes an opportunity. San Francisco enters homes, offices, and hospitality with opportunistic potential in 2021. It is also the second largest market for life sciences after Cambridge, MA. After all, Oakland and other parts of the East Bay are still considered strong industrial markets.
Miami is Florida’s largest and most cosmopolitan subway. It also benefits from a tax and business friendly environment that enables above-average employment growth and is strongly tied to land. We like Miami as one of the best places to invest in real estate as it offers multi-family investment opportunities due to its high priced properties. It’s one of our favorite industrial markets, as well as one of the top hotel markets where we get back on our feet after vaccination.
A central location and the convergence of four major interstates make Indianapolis an important distribution center in the Midwest. The presence of the state capital offers a stable employment base and, in contrast to the competing cities in the Midwest, is growing faster than the national average. The cost of living is relatively low, which makes it attractive to residents looking for a more affordable lifestyle.
Orlando had a record 75 million visitors in 2018, making it the most popular travel destination in the United States. While COVID-19 devastated the Orlando tourism market, it is likely to recover in the second quarter of 2021, which is likely the last chance to buy a cheap hotel property this year. With tourism being the leading history in Orlando, it’s easy to miss the fact that it is also home to one of the largest universities in the country, the University of Central Florida.
19. Northern New Jersey
A solid interstate system, Newark International Airport, New Jersey Harbor and proximity to over 23 million people make Northern New Jersey CrowdStreet’s # 1 industrial market for 2021. This factor alone makes it one of the top 20 CrowdStreet markets , but with apartment rentals at the north New Jersey apartment building market has been one of the main beneficiaries of the COVID-19-induced migration from Manhattan.
20. Inland Empire (San Bernardino and Riverside counties)
The Inland Empire is a blue chip industrial market with a regional population of 23 million people. It’s also the cheaper option for Los Angeles and Orange Counties residents. This has resulted in remarkable apartment building fundamentals in the form of above-average population growth, below-average home ownership rates, and a staggering 7.7% year-over-year rental growth, making it one of the best places to invest in a real estate estate.