Investors still have many opportunities to get a decent return on commercial real estate. It all depends on what real estate market you are looking at. Even though capital is flowing toward highly valued core commercial properties, the lower end properties such as Class B and C are becoming more popular. According to the article, certain markets such as Salt Lake City have the potential for commercial real estate returns. If investors are disciplined in their investment strategies they can find yield in different markets but they have to dig for it.
Excerpts from Article: “For Part II of this story, we asked investors and brokers where they see the best returns available for the money. And while some are still concerned about putting more money into core markets and in certain multifamily markets, that doesn’t mean there aren’t good returns to be had in those products and places. Real wage growth is just starting to take hold and thus core office and multifamily product still have legs, many said.”
“The asset class that I think presents the most opportunity right now is well located Class B office space right around core markets, transit hubs and in growing urban infill locations,” Poitras said. “The demands of office users are changing. There will be many older, obsolete office buildings in great locations, but with poor lighting, poor air circulation, and inefficient floorplans. They could see a huge value boost through smart redevelopment.”
Citation and Link: Heschmeyer, Mark 01 Apr. 2015. “Too Much? Too Fast? (Part II) Investors Digging Deeper for Best Potential Return” ” Costar” 08 Apr. 2015 http://www.costar.com/News/Article/Too-Much-Too-Fast-Part-II-Investors-Digging-Deeper-for-Best-Potential-Returns/170181
Picture Link and Citation: Heschmeyer, Mark. “Too Much? Too Fast? (Part II) Investors Digging Deeper for Best Potential Return” 01 Apr. 2015, Website. http://www.costar.com/News/Article/Big-PE-Players-Among-Most-Active-Buyers-and-Lenders-for-Commercial-Property/169789