Orlando, Florida, and the Texas cities of Austin and San Antonio are identified as the U.S. markets offering investors the best real estate value for 2016 in an annual forecast jointly produced by the National Association of Realtors, Situs and Deloitte. The rankings, based on the Situs RERC Value vs. Price Index, rate the 20 cities with top potential for office, industrial, apartment and retail returns. This year, they are predominantly located in southern and southwest states.
Orlando tops the list for both office and apartment properties; San Antonio is first for retail and second for both industrial and apartment properties; and Austin is the top market for industrial and second for retail. Raleigh/Durham, North Carolina, is the only other market to crack the top-two, placing second for office prospects.
The rankings are derived using data analytics to weigh value and price characteristics. This excludes some markets that are currently strong performers but in a different stage of their cycle than many of the secondary and tertiary markets identified as this year’s leading opportunities.
“We seem to be entering a new phase of the cycle, where commercial real estate is fully priced and where the asset class is considered mature,” the forecast’s conclusions state. “Values and prices are beginning to flatten, and Situs RERC expects them to level off in 2016. We can still expect reasonable return performance, although returns will be based primarily on income (vs. capital appreciation) in 2016.
In the U.S. midwest, Omaha, Nebraska, offers the best investment prospects, ranked third for apartment, fifth for office, seventh for retail and 17th for industrial markets. Seattle stands out in the northeast at fourth for industrial, 13th for retail, 14th for apartment and 18th in the office market. No cities in the northeast are represented in any of the property categories.