Commercial Real Estate Frontline

The leaves are falling, we’ve changed the clocks and our thoughts turn to what next year will bring. Each fall the Urban Land Institute produces a report entitled Emerging Trends in Real Estate which forecasts real estate investment, finance, and development trends for the upcoming year.  Last week, ULI’s Boston District Council hosted a discussion of this year’s report.  The mood was gloomy, as panelists agreed with the report’s conclusion that “commercial real estate faces its worst year since the wrenching 1991–1992 industry depression.”  Ouch.

But rays of sun shine through the storm clouds. 

The ULI report included Boston in a list of markets to watch, awarding it modestly good investment prospects and declaring that “plenty of investment and money management jobs remain; health care, biotech, and education help pick up some of the slack, and the area’s top-ranked colleges and universities provide exceptional talent to seed the workforce.”

Furthermore, the ULI report deals in averages and generalities across entire metropolitan areas; yet local submarkets are varied and complex.  Last month the Patriot Ledger reported on the continued vitality of the south suburban office market, building on a similar article earlier in the year that labeled the south suburban market as the Boston area’s “most popular new address for corporate tenants in 2008.” Because rents are lower than in Boston or the west suburban market, companies consider the south suburban market a ‘value play’ in difficult times, leading to reduced vacancies and stable values.  So amid the gloom and doom, property investors can still find great opportunities, if they know where to look.

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