As new industries expand, patterns of residency and employment shift, and in turn, inform which cities are the most desirable for commercial real estate investments. Below is an overview, in no particular order, of five best American cities to invest in commercial property.
#1 San Francisco
Silicon Valley, home to hundreds of major start-up and global technology companies (Google, Apple, and Facebook, just to name a few) boasts an absolutely saturated rental market with low vacancies, and this market will only continue to grow, making San Francisco an ideal place to be a landlord. And because unemployment is at an all-time low in San Francisco, investing in commercial property for office rental is also typically a lucrative decision.
#2 Houston and Austin
Texas has a generally stronger economy than the rest of the country, very much on account of Houston’s thriving energy industry. Industrial rents have raised significantly over the last couple of years, making Houston a prime location for purchasing commercial real estate. Not far behind Houston on the list is Austin, Texas, a city expanding with millennial transplants on account of it’s hip vibe (annual and rapidly growing interactive media festival South by Southwest is held here, and the city’s slogan is “Keep Austin Weird”), low unemployment, and a generally decent rental market. Asking rents and absorption are on the rise, making Austin an ideal city for residential landlords.
Miami is reinventing itself as a residential, commercial, and tourist hub after flailing during the recession on account of tremendous CRE overbuilding. Office building rent is currently much higher per square foot than ever, and industrial vacancies are at an all time low. Commercial property real estate in prime tourist areas (Miami Beach, South Beach, Art Deco District, Ocean Drive, Bayside Marketplace, etc.) is and should remain a smart investment.
While Illinois has recently topped several lists of states with the highest attrition, and while Chicago often trails coastal cities for best commercial real estate, Chicago is thriving overall. It remains one of the most desirable cities on account of size, population density, transportation (and walkability), and local economy. Because Chicago remains one of the most central and diverse economic bases in the country, it remains a core commercial real estate market for any number of property types. Redfin recently named Chicago’s Ukrainian Village as the “Hottest Neighborhood in the Country,” and rental vacancies are low city-wide.
While Seattle has always been an attractive residential city, it is a newer addition to this list, mostly on account of Amazon.com recently making its home there, creating an enormous amount of new-office construction. Likewise, the magnitude of Amazon has saturated the rental market and necessitated the building and expansion of residential properties as well–also a solid investment.