“Go west, young man,” may be just as appropriately uttered concerning today’s commercial real estate market as it was when originally penned in the mid-nineteenth century. The best areas for a likely return on investment seem to be located mostly west of the Mississippi River. The complex process of determining what commercial properties will be good investments takes into account many variables. Factoring in the various elements of what will constitute a good investment is partly an art form but mostly science. Getting a good grasp of how economic factors that can otherwise seem positive can sometimes negatively affect commercial real estate projects can seem a little counterintuitive at times.
Take, for example, the rapid employment growth the country has experienced in the last several years as we have pulled our way out of the recession. One would normally think that nearing full employment is a good thing for building a healthy economy. And, it is. However, when looking at the situation from the standpoint of a commercial real estate investor, one may see a slight disadvantage to this otherwise desirable condition. Nearly full employment means that fewer businesses are looking to expand their office space; they are satisfied with what they currently have. This means that buying a building now could turn out to be a mistake unless it was in an area still experiencing job and business growth.
Advancing technology also comes into play. As businesses take advantage of cloud computing in record numbers, many are finding that smaller office space is an option. Without having to house large server rooms, many businesses are free to downsize and reconfigure existing space instead of leasing larger areas. While many consider technology a great boon to business in general, it can spell trouble for the careless commercial real estate investor. Spotting an area where most businesses have already completed the process of moving to the cloud could be an important consideration when deciding on what area to invest.
An area like Dallas, TX, could be one of the best markets for office space investment. Dallas is still experiencing rapid job growth and business expansion. Many of the businesses there have also already adopted cloud technology and are looking to upgrade space for new employees. As long as the western and southwestern regions of the country continue this trend, they will likely provide many good opportunities for investment. So, when you are looking for solid office investment, remember to look westward.