Boston – A recent survey of commercial real estate investors ranked Boston as one of the top 10 US metropolitan destinations. CBRE’s 2023 US Investor Intentions Survey ranks the Boston real estate market ninth.The survey found that in 2023 more investors are prioritizing high-performing secondary markets (as opposed to gateway markets), particularly those with good prospects for employment and population growth, which may result in greater potential for both equity and income growth. The Sun Belt markets are the most attractive: Dallas is the preferred market, followed by Austin. “Despite rising borrowing costs and fears of a potential recession, the Boston market remains one of the top markets for investors given the stability of the local economy, with the drug and eds sectors leading the way,” said Simon Butler, CBRE vice chairman.
“Buyers and lenders have become increasingly selective in the face of Fed monetary policy and changes in underwriting criteria,” added Heather Brown, CBRE executive vice president. “But a shortage of quality products and rising rents in many market sectors, including office, industrial and retail, still make Boston one of the nation’s most active markets.”
Other key findings from the 2023 survey (performed in December 2022):
- Investors cite rising interest rates, a possible recession and limited credit availability as their biggest challenges this year.
- More than half of investors expect buying activity to decrease in 2023 from 2022 levels. Amid slower price momentum, 60% of respondents say they will either sell less than last year or not at all.
- The most sought-after sectors remain multi-family housing, particularly apartment complexes, and industry, led by modern logistic facilities in key markets. Shopping centers are the most popular sub-sector for retail investors, while office investors predominantly prefer class A properties in prime locations.
- With attractive yields amid higher interest rates and tighter financial market conditions, more investors than last year will adopt opportunistic and leverage strategies.
- While investors remain committed to environmental, social and governance (ESG) criteria, nearly half of respondents say the deteriorating economic outlook will limit the extent to which they consider ESG criteria in their investment decisions.
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