Smart Capital Center’s research team is sharing its latest market insights to help you stay ahead in the evolving market.

California: Californians Are Returning to the Office – Now What?

Los Angeles’s offices are opening back up – just not evenly. With the “Great Resignation” occurring, office investments can be a little scary.

Here are some key takeaways to help pivot your investment decision and make a profitable office investment in Los Angeles:

1. Century City Continues to Thrive
According to the Newmark 2022 Q1 Report, despite Century City’s high rent, leasing activity remains strong and vacancy is one of the lowest on the Westside. 

2. Older, Less Updated Buildings Remain Stagnant
As employees head back to the office, employers are looking for buildings that attract the employees to the office. Older, less updated buildings still sit largely vacant.

3. Medical Buildings Push Deal Flow According to Marcus & Millichap, transactions involving medical buildings have made up 1/3 of all deal flow in LA. Suburbs such as San Gabriel and San Fernando Valleys have seen the most medical office investment. 

New York: Why you should consider investing in the Gowanus Neighborhood

Last year, the New York City Council approved the re-zoning of the Gowanus neighborhood in Brooklyn. The industrial neighborhood is now set to turn into a mixed-use neighborhood with an estimated 8,200 new apartments hitting the skyline.

Investing in the neighborhood now will put you at the forefront of the development. Here is why you should invest now: 

1. Multi-Family Development Land Will Hit the Market
Rather than displacing hundreds of residents, this re-zoning will take underutilized, industrial property and convert it to multi-family development.

2. Collaboration with Current Residents
Typically, when cities approve a re-zoning, there is resistance with the current residents. Throughout the re-zoning and development efforts, The City has worked with current residents and tenants in the area to ensure all parties are appeased. This will ensure a safe investment without kickback from the community.

3. Property Value Will Rise
The re-zoning is going to lead to a lot of development in the area, which will in turn increase the property value. Investing early will allow you to see a greater return to your investment as development continues to grow and more retail comes in.

Florida: Why you should invest in Miami office properties now

With the “Great Resignation” occurring, office investments can seem a little scary, however, the financial and tech exodus to South Florida and the slow vacancy decrease make Miami an attractive place. Key takeaways:

1. Miami’s Office Market Has Made a Huge Recovery
According to Avison Young’s Q4 2021 Office Market Report, Miami has recovered by 86.4% across all sectors and is way above the national average 66.6%.

2. Office Demand is Increasing
Miami’s office landscape is in demand. Overall leasing is up 30.3% from the total leasing volume during 2020. At the end of Q4 2021, leasing activity was 6% higher than pre-pandemic levels.

3. Developers Are Looking Toward Residential and Suburban Areas
As more companies are moving into the downtown Miami office space, developers are looking toward the residential and suburban parts of the city.

4. Class A Rents Are Increasing
Class A buildings are dominating the market and had the most growth in 2021. They saw the most positive absorption, with over 154,000 square feet of absorbed space. However, Class C buildings fell just behind and saw 149,000 square feet of absorbed space.

Arizona: Why you should invest in retail in Phoenix

As restrictions ease and more and more stores open, Phoenix’s retail market continues to outperform other markets. Here are some key takeaways:

1. Retail Vacancy Rate Is Low and Continues to Decrease
Phoenix’s vacancy dropped to 6.8% in Q4 2021, which is the lowest vacancy the city has seen in 7 years.

2. High Investment Sales Strength
Last year Phoenix recorded a 29% year-over-year in retail real estate volume, which was the second-highest growth rate in the top 20 markets. Real Capital Analytics placed Phoenix at 12^th in their liquidity ranking, which is expected to move up as investor demand surpasses for-sale offerings.

3. Growth in the West Valley Is Projected to Increase
There are a few expansions and freeway additions, including I-10 and I-14, that are expected to aid the expansion and growth of the West Valley. This in turn will drive demand for all property types in Phoenix, including retail.

Texas: Affordable housing opportunity in Dallas

The sudden and significant population boom in DFW has not only increased job creation — but has also increased the demand for all types of commercial real estate. An issue that has presented itself with the sudden population growth is the lack of workplace housing in the newly developing areas.

There is currently a disconnect between available, affordable housing and the location of employees’ workplaces. What does this mean for investors?

1. High Opportunity Market Segment
The housing demand in North Texas is continuously growing.  This means more job opportunities are being created, creating the need for affordable housing for the new workers. Affordable multifamily properties will continue to be in high demand in these developing North Texas neighborhoods.

2. Invest Early
Investing in affordable multifamily properties near these developing towns at an early stage will give you less of a saturated market and better pricing entry points.

3. Easier Financing
Lenders’ interest in workforce housing has grown over the years. Lenders are leaning in on workforce housing projects in North Texas. When rents are more attainable, there’s a larger pool of potential renters who can afford to live at the property, making these projects very resilient from lenders’ viewpoint. 

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