Phoenix, Ariz. — A recent survey of commercial real estate investors ranked Phoenix as a top 10 target among Americas metros. Phoenix jumped two spots to #9 in CBRE’s 2019 Americas Investor Intentions Survey.
The survey, which covers all asset types, found that, in 2019, more investors are prioritizing secondary markets that can offer greater potential for both equity and income growth. Investor interest in secondary assets increased for the fifth consecutive year (33%) to gain significant ground on value-add (37%) as the most preferred strategy.
The survey also examined how investors view each of the different asset types:
Industrial & Logistics is still the preferred property type, cited by 39 percent of investors as the most attractive for investment in 2019.
Multifamily closely followed in second place, with 37 percent of investors naming it as the next most attractive property type—up from 20% in 2018.
Office was cited by 10 percent of investors as the most attractive for purchase in 2019.
Retail’s share of investors (9 percent) has held essentially steady over the past three years, despite competition from e-commerce.
“Phoenix is one of the top markets in the nation for population and employment growth, which is bolstering performance across all property types,” said Tyler Anderson, Vice Chairman, Capital Markets, CBRE. “With strong fundamentals and relatively muted new housing and apartment construction, household formation continues to outpace the supply of new single-family homes and apartments. These factors are driving investor interest in multifamily in Phoenix, which remained the preferred property type among investors in 2018. We expect multifamily to lead investment this year as well.”
Overall, the survey shows that investors will remain active in commercial real estate markets this year, with 98% of respondents intending to make acquisitions. There has been a pronounced shift toward greater caution, with the share of investors planning to either maintain or increase spending in 2019 falling to 75% (from 88 percent in 2018).
“Continued strong real estate fundamentals, combined with historically deep debt and equity capital markets, provide good momentum for 2019. Investors are reducing risk and protecting income streams through diversification. Pricing is at or near the previous peak for most asset types in prime locations, so investors are seeking yield in secondary markets and alternative asset types,” said Chris Ludeman, Global President, Capital Markets, CBRE.
Survey respondents and methodology: The Americas Investor Intentions Survey 2019 was conducted among CBRE clients during November and December 2018. The Americas survey is part of a larger global survey and covers the responses of nearly 300 investors who indicated the Americas is the global region that they are responsible for in their current position. The Americas respondents represent a diverse range of real estate companies and investor types. The largest investor groups in this year’s survey were developers/owners/operators and private equity, which is a change from prior years. Institutional investors—sovereign wealth funds, insurance companies and pension funds—account for 8% of respondents. Most respondents (68%) have less than $10 billion in assets under management (AUM). Eleven percent have more than $50 billion in AUM, and the remaining 21% fall somewhere in between. Institutional investors have significantly more capital to deploy—43% of institutional respondents have more than $50 billion in AUM. Nearly all Americas respondents are based in the U.S. This year’s survey included slightly fewer cross-regional investors than in previous surveys, particularly investors based in Canada.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.