For those of you interested in commercial real estate, here is some good analysis from CoStar to kick of 2013… Highly recommended to review.
The short analysis is that the commercial recovery is up essentially ~287% since 2009 vs. the S&P 500’s ~142%. You’ll notice most of that gain is from multifamily transactions in prime markets. Office/Retail being the laggards and especially office/retail in non-prime markets. Thinking through what this means… there are still plenty of people who have a need to live somewhere – new household development has returned to pre-2009 levels (during the 2009 timeframe new household creation dropped significantly). This also means that the small business growth that drives the Office/Retail transactions has not caught back up yet (and perhaps is a place to still find value).
I have also attached some more research on prime markets from Jones Lang Lasalle below, it doesn’t capture where growth would exist in non-prime markets – it does highlight what kind of competition exists in prime markets and emphasizes the need to find great deals regardless of the market. Looking at the data that seems to mean Office/Retail that is undervalued in any market or perhaps more rare – Multifamily that is undervalued.
