This article originally appeared on CoStar Insight. It has been republished here with permission.
Like seasoned surfers scouting for the perfect wave, commercial real estate investors are also active during the summer, scanning the choppy investment waters for suitable investment targets.
Navigating the challenging commercial real estate landscape requires a keen understanding of market dynamics and the major players involved. Familiar industry adages like "being in the right place at the right time" and "if you're in the room, you're in the deal," underscore the importance of strategic positioning and anticipating market moves.
To that end, historical sales data tracked from 2010 reveals that the most bustling summer markets are primarily located in the so-called Smile states, the line stretching from Seattle through Southern California and east through Arizona, Texas, and Florida, culminating on the East Coast in New York and Boston, that on a map runs in the shape of a smile.
Atlanta has emerged as a standout sales market with a long-term average of 259 building sales per quarter during the peak summer months. Close contenders include New York City and Dallas-Fort Worth with approximately 232 and 228 properties trading, respectively, followed by Chicago — notable for being outside the geographic smile line — and Phoenix, with about 200 trades per quarter.
The current market backdrop favors entrepreneurial investors with access to capital since high interest rates and the trepidation toward the office sector by institutional investors present a window of opportunity to acquire assets with minimal competition. Presently, more than 100 Atlanta office properties are listed for sale on the CoStar platform, encompassing 7.3 million square feet and varying in value from several million to tens of millions of dollars.
Investors can explore diverse avenues, from owner-user opportunities in renovated projects to medical office buildings as well as value-add or conversion projects. As 2024's summer gears up, the office sector appears ripe for pricing exploration. The season for securing new real estate investments is just beginning, and we look forward to reporting and analyzing the deals as they happen.
Looking for more insights on the New England CRE market? The June/July 2024 issue of BID Magazine is now released and spotlighting Boston and Connecticut. Download your free digital copy now!