Ranking Top Markets

We usually talk about residential real estate, but I want to talk about commercial real estate today. Auction.com released its rankings of the office sector’s top buy and sell markets based on current and expected fundamentals. San Jose, Calif., San Francisco, Seattle, Orange County, Calif., and New York topped Auction.com’s list of buy markets, each boasting strong demographics, one or more booming business sectors and improving payroll growth. Pittsburgh, Fort Worth, Texas, Houston, Memphis, Tenn., and Cincinnati were identified as the most recommended sell markets based on factors specific to each, including dependence on the energy sector, weak employment growth or lethargic demographics.

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“As nationwide office fundamentals continue to recover in 2015 and the tech industry paces the nation’s best-performing markets, investors still must take note of the sharp contrasts between the have and have-not markets,” said Auction.com Chief Economist Peter Muoio. “Investors will find sustained rent growth and strong occupancy on the West Coast and in tech-driven markets that we predict will enjoy continued success. Other markets, meanwhile, face an abundance in supply that is overwhelming demand and weighing on rent, and this could persist.”

Auction.com’s report notes sharp differences between individual markets and regions despite very little change in fundamentals for the office sector at the national level. The most strength is seen in markets abetted by the technology surge: the West Coast, New York City and Boston. Washington D.C., having navigated through its recent supply and demand mismatch, now offers improved prospects, as do Denver, Atlanta and Phoenix.

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“The health of an office market depends on more than what’s happening in a particular segment of the economy, although markets with high-tech companies are certainly faring better today than markets that depend on energy companies,” noted Auction.com Executive Vice President Rick Sharga. “But the economic health of a region — its ability to create good-paying, full-time jobs — is what really drives the underlying fundamentals, and determines whether a market should be in buy or sell territory.”

Top 5 Buy Sell Markets

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