Job growth has been booming as the U.S. commercial real estate market surpassed its 2007 peak in April 2013. So where are the jobs and what does the surge mean for real estate investors?
The Cornell/ SelectLeaders Job Barometer shows a 27% increase in commercial real estate industry job openings. According to the matrix accounting and property management jobs in particular have grown, and made up 24% of all job postings last year.
With job growth now expanding to 35 states office and multifamily properties are also getting a lift and demanding more attention from investors. However, before rushing in, it is critical to consider some of the side effects of this news in order to yield the best returns.
1. Selecting a Quality Property Manager
With property management a hot field as real estate firms try to spin themselves off to capitalize on the bulging portfolios of buy and hold investors, many new managers are coming in and new firms popping up, attempting to cash in.
Remember no matter how attractive any commercial real estate investment opportunity may be, the ultimate yields and returns are directly tied to the quality, effectiveness and efficiency of property management. So before signing on, make sure you are selecting an established full service property management company with a proven track record of success.
2. Know Sector Trends Before Rushing in
Business may be getting better in the U.S. and according to a recent 2Q13 Global Market Perspective report the second half of the year ought to see a significant shift to a ‘landlord’s market’, but not all types of office space will see equal demand. U.S. companies continue to be cautious. Startups are flourishing and hiring is increasing but the coworking space is clearly outperforming most other types of office leasing niches. The same philosophy goes for any form of commercial real estate you are eyeing; know the fine trends and own those.
3. Access to Capital
News of increased hiring is also spurring more confidence and investment. However, while the hunger to loan and appetite to take on more debt is growing, easier access to funds and better terms can also make a huge difference in the performance of an investment.
According to an Investment Program Association survey of high net worth investors, 80% of respondents believe commercial real estate performance will outperform equity markets over the next 5 years. A whopping 45% of those surveyed said they plan to invest in unlisted pooled fund vehicles. This offers access to more capital and funding flexibility to investors looking to ramp up acquisitions and capitalize on current market opportunities.