By Chris Cobb | Associate
Welcome back to the Big3 with CC, your personal real estate investment source. March Madness is heating up. Conference tournaments are heating up with new teams punching their tickets to the tourney every day. Start thinking about your Big3 (or Final Four) soon. Today we touch on a sector new to Big3 and seldom talked about in the investment world, Suburban Offices. They may be a good investment, but investor beware:
Proximity to Retail
Of the highest importance, Millennials love amenities and need food options to post on Instagram before they eat. But in all seriousness, walkable retail makes an enormous difference to tenants of all ages. If you come across a suburban office with retail on the ground floor, you need to take a serious look at investing your capital. Some of the most successful companies, such as Google and Bloomberg, have figured out a way to make their employees happy and create higher productivity by offering excellent lunch options and other amenities within their walls. Locally, Navy Federal Credit Union has a Class A cafeteria and workout facility that most employees rave about. Even having a Starbucks or local coffee shop in the lobby with outside access can go a long way.
Investment Sale Volume
Investment sales volume for offices in the ‘burbs is now outpacing sales in central business districts (CBDs),” according to David Bitner, Vice President Capital Markets Research with real estate giant Cushman & Wakefield. He notes that in 2017, investment sales volume in CBDs fell 23% from 2016, while suburban sales volume rose by 2%. Also, according to Bitner, “Investment activity continues in the suburban office market, and yields are liable to be as good or better than CBD markets. People tend to forget that 70 percent of office inventory nationally is in the suburbs because more people live and work in the suburbs than in urban centers.”
According to the U.S. Census Bureau, 54% the U.S. population lives in the suburbs. As the new workforce starts to buy homes in the suburbs, this number may continue to grow. Quality of life and work-life balance are also very important to Millennials, thus suburban offices that are close to home are more desirable. However, some analysts say that millennials are renting longer and living in urban areas until their early 30’s. For some good data and a graphical representation, click here.
When it concerns real estate, invest yourself.