When the real estate market bubble burst in the midst of the economic recession of 2007 and 2008, thousand of businesses were forced to file bankruptcy and commercial real estate development came to a halt. Even larger cities, from the Midwest to South Florida, suffered the effects of an economic crisis and many development projects were put on hold— or never came to fruition.
Research published in the Business and Economic Journal outlines how the commercial real estate (CRE) market underwent several significant changes after 2007 after a period of time when developers had overbuilt commercial and residential properties. Their analysis reveals how the value of commercial real estate plummeted and the economic recession left many business owners out of funds to maintain their current property or even explore the idea of expansion.
Still, several cities around the United States were able to recover from the economic bust in 2008 and others are showing strong signs of a commercial real estate revival. From Denver to Chicago, several markets across the country are experiencing rapid and steady growth in the commercial real estate sector. Here’s a closer look at top cities in the United States seeing a commercial real estate boom in recent years:
Latin Americans have been investing in properties throughout South Florida for some time but in recent years, we’ve been seeing an influx of more Latin Americans seeking out commercial real estate for their businesses and developing new investment properties to attract other business owners. As reporters have pointed out, currency devaluations in Argentina, Brazil and Venezuela drove many Latin Americans to the United States. Investors and developers set their sights on Miami since the city long been a popular vacation destination and is a predominantly Spanish-speaking city.
In early 2015, valuations of office buildings in Chicago hit record highs, according to industry tracker Real Capital Analytics. The value of real estate transactions around the country jumped 36% in that same year, according to The Wall Street Journal and lower interest rates in recent years have made investing in commercial real estate — especially in pricey markets like Chicago — even more popular. LaSalle Investment Management, a property management firm based in Chicago, tells The Wall Street Journal that this boom in Chicago can best be described as a ‘late-cycle’ market, a fitting description for the Windy City considering it took at least a few years for the city to pick up the pieces from the recession and rebuild.
The retail sector is thriving in Denver as more retailers expand operations and seek out storefronts to accommodate for the city’s rapid population growth. Commercial real estate is in high demand in Denver and analysts from CBRE Group Inc. have pointed out that in the second quarter of 2015, Denver’s activity levels were comparable to the office and industrial real estate markets. Growth has been steady and Denver even managed to earn the fourth ranking overall in Urban Land Institute’s 2015 Markets to Watch Report. The report reveals that the growing housing market and strong technology and energy sectors are fueling population growth which in turn makes Denver an attractive destination for retailers and commercial developers.
Commercial real estate developers across the country are experiencing the positive effects of a stronger economy as the nation recovers from the economic crisis and real estate development continues to boom. A migrating population to larger cities, business expansions that generate more jobs and attract more talent to financial districts, and the increased appeal of commercial investment opportunities for both overseas and domestic investors all play a role in the recent real estate boom in major cities.