CCIM Feature

Market Analyst

As the inventory of quality assets in top-tier markets began to shrink this year, investors turned their attention to secondary and tertiary markets. “This robust interest marked a turning point for commercial real estate,” says George Ratiu, director of quantitative and commercial research for the National Association of Realtors. Markets such as Seattle, Austin, Texas, and Jacksonville, Fla., continue to lure hungry investors.

“These smaller markets offer higher yields, and in the case of technology, energy, or intermodal transportation centers, significant upside potential,” Ratiu says. “As the diversification and availability of capital sources continue into 2014, midsize and smaller markets are well positioned to ride the rising tide of commercial transactions.”

Ratiu has seen a wide range of economic and commercial real estate activity during his career. With experience analyzing Eastern European countries’ integration into the European Union and its effects on commercial properties, Ratiu brings a global perspective to his role at NAR. “In Washington, D.C., I’ve had a front-row seat for the 2008 financial crisis, the ensuing global recession, and the arduous economic and commercial real estate market recovery,” he says.

As 2014 gets underway, Ratiu expects employment to remain the No. 1 concern for commercial real estate’s continued growth. “A large portion of the population remains under or unemployed,” he says. “Add stagnant or declining real wages, and we can see why vacancies for office and retail properties remain at double digits.”

On the upside, a strengthening housing market and gains in the financial markets have boosted consumers’ “wealth effect,” Ratiu notes. Increased consumer spending, reduced consumer debt, and widening credit availability are contributing factors that translate into positive news for commercial real estate. “With interest rates expected to remain relatively stable next year, commercial markets should experience improved fundamentals and continuing investment opportunities,” he says.

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