PORTLAND, Ore. (BUSINESS TRIBUNE) — The City of Roses has jumped to yet another Top 10 list of U.S. cities — this year, for investment opportunities in commercial real estate.
Portland is the No. 9 best metro area in the U.S. to invest in commercial real estate this year, according to CBRE findings in its 2018 Americas Investor Intentions Survey. Last year, Portland was ranked No. 16.
"Portland’s jump into the top 10 illustrates the tremendous amount of growth we’ve seen over the past few years," said Jason Green, CBRE’s managing director for Oregon and Southwest Washington. "The biggest indicator of new investor interest is growth in office-using jobs and continuously shrinking unemployment rates, and that trend is likely to continue in our region."
The survey covered all asset types and showed that 88 percent of investors plan to either maintain or increase spending in 2018, up from 83 percent in 2017.
By property type, industrial is increasingly preferred: it was cited by 50 percent of investors as the most attractive investment in 2018, up from 38 percent during 2017.
After that comes retail, cited by 20 percent of investors as the next attractive property type. Its share decreased from last year. As for office space, 14 percent of investors said they’re planning to invest in office properties in 2018.
According to the survey, investors also have new opinions about shared spaces and co-working. At 20 percent of a building’s total space, more than 90 percent of investors see co-working as having a positive or neutral effect on a building’s long-term capital value. However, more than half of the respondents said that once co-working space climbs to 40 percent or more of a building’s total space, it adversely affects valuations.
Many commercial space buildings have changed hands or come online in the Portland area recently, including the Wood Village Town Center and McMinnville Plaza, which are both under new ownership after deals worth $26.6 million and $17.4 million respectively.
"Despite the possibility of escalating interest rates, the vast majority of investors intend to acquire assets in the Americas in 2018," said Brian McAuliffe, president of institutional properties and capital markets at CBRE.
The survey is part of a larger global survey conducted between mid-November 2017 and mid-January 2018 and included approximately 300 survey respondents who said the Americas is the global region they’re responsible for in their professional position.
The Americas respondents represent a wide cross-section of real estate companies and investor types: slightly more than one-third are fund or asset managers. Institutional investors — sovereign wealth funds (SWFs), insurance companies and pension funds— account for 14 percent of respondents.
Among the asset and fund managers surveyed, the largest source of capital is pension funds at 66 percent, followed by SWFs at 43 percent. Most respondents — 59 percent — have less than $10 billion in assets under management; 25 percent have more than $50 billion; and the remaining 16 percent fall in between.
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