San Diego jumped six spots to #11 among Americas metros, as the majority of CRE investors anticipate increased buying activity in 2018
Los Angeles CA— A recent survey of commercial real estate investors ranked San Diego as a top 11 target for investment among Americas metros. San Diego, which investors ranked at #17 in 2017, jumped six spots to #11 in CBRE’s 2018 Americas Investor Intentions Survey.
The survey, which covered all asset types, shows that 88 percent of investors plan to either maintain or increase spending in 2018—up from 83 percent in 2017.
The survey also looked at how investors view each of the different asset types:
- Industrial – Industrial is increasingly the preferred property type, cited by 50 percent of investors as the most attractive for investment in 2018, up from 38 percent in 2017.
- Multifamily – Cited by 20 percent of investors, multifamily is the next most attractive property types, though its share decreased from last year.
- Office: Fourteen percent of investors said they are planning to invest in office product in 2018.
- Retail: Despite competition from e-commerce, the retail sector improved modestly from last year (10 percent in 2018 vs. 8 percent in 2017).
“Many new investors are coming to San Diego who are attracted to the region’s strong market fundamentals such as low vacancy, a diversified economy, a lack of development sites and the lowest construction deliveries for office and industrial properties on the West Coast,” said Louay Alsadek, executive vice president, Institutional Properties, Capital Markets, CBRE. “Additionally, existing companies and new start-ups in our growth industries, such as life science and technology, have continued to increase their presence in the region, which has fueled net absorption and rent growth. Moving forward, San Diego’s positive economic fundamentals will continue to attract investors.”
The survey also provided insight into how investors view the growing trend of 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.
“Despite the possibility of escalating interest rates, the vast majority of investors intend to acquire assets in the Americas in 2018. Risk tolerance is expected to remain unchanged, but investors’ search for yield and asset diversification is pushing them toward value-add assets, secondary markets and alternatives in 2018,” said Brian McAuliffe, President, Institutional Properties, Capital Markets, CBRE.
Survey respondents and methodology
The Americas Investor Intentions Survey 2018 is part of a larger global survey, which was conducted among CBRE clients between mid-November 2017 and mid-January 2018. Approximately 300 survey respondents indicated the Americas is the global region that they are responsible for in their current position. This survey covers the responses of those investors. 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—SWFs, insurance companies and pension funds—account for 14% of respondents. Among surveyed fund/asset managers, the largest source of capital is pension funds (66%). SWFs were also identified as a significant source of capital (43%). Most respondents (59%) have less than $10 billion in assets under management (AUM). Twenty-five percent have more than $50 billion in AUM, and the remaining 16% fall somewhere in between.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com