Real estate investors now favoring medium-sized cities

On Behalf of | Sep 15, 2016 | commercial real estate

Commercial real estate analysts are viewing a recent Florida deal as evidence of investors’ shift away from large metropolises. Acre Valley Real Estate Capital and ABS Partners Real Estate recently paid $150 million to become co-owners of the Datran Center, an office complex in Miami. Last year, the two investment firms also purchased an apartment building in Cary, North Carolina, and three office buildings in Charlotte, North Carolina.

Commercial real estate investors have been favoring medium-sized cities in recent years due to rising prices in sought-after markets like New York City, Boston and San Francisco. Though commercial real estate investors used to focus on these cities, the property prices have gotten so high over the past couple of years that investors have started to look elsewhere. Commercial real estate in cities like Miami, Dallas and San Jose are now seen as having more profit potential.

Though rental rates in major cities are expected to keep rising, many investors don’t believe that the potential for high rental earnings will offset the high purchase prices. Investors are now looking for better opportunities in cities that still have reasonably priced properties with rental rates that are just starting to rise.

Becoming a commercial property landlord can be more complicated than simply buying a property and selling it. An attorney may be able to help a commercial real estate investor to navigate the process of renting out units in an office building, apartment complex or warehouse. Before an investor agrees to rent to prospective tenants, an attorney may help protect the client’s interests by drafting detailed legal contracts.