Investors Eying the Suburbs, Again

Posted August 14, 2017

As more millennials enter the workforce, property owners and operators are responding to their demands by reshaping office spaces. In “Special Report Suburban Office Challenging CBD,” Marcus & Millichap notes that many companies are moving to downtown locations in large cities. But the report adds that suburbs are adjusting as well, and explains how they’re being successful.

“Numerous suburban office locations have become increasingly competitive, however, by clustering in walkable villages featuring many of the amenities and services of urban environments,” the report notes. “These locations are generally more affordable than their urban counterparts while remaining attractive to employees seeking a variety of offerings that are within walking distance.”

The report finds that almost one-quarter of commercial real estate transactions in 2014 involved urban properties. “Since then, investors have once again begun to focus on suburban options, restraining downtown activity to 21.7 percent of 2016 office sales. The flow of capital reflects the convergence of opportunity, yield, and perceptions of future growth, and it appears investors’ attention is once again moving beyond the core.”

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