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Denver a Top Five Market for CRE Investment in 2021

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According to CBRE’s 2021 Americas Investor Intentions Survey, commercial real estate investors are showing increased appetite for risk and a preference for secondary markets. The survey ranked Denver as a top five target among Americas metros, jumping two spots to No. 5, up from No. 7 last year.

Investors are prioritizing secondary markets instead of gateway markets, particularly those with strong job and population growth prospects, which can translate into greater potential for both equity and income growth. Sun Belt markets are the most appealing: Austin is the top preferred market, followed by Dallas.

The survey findings also reveal the sustained appeal of tech-driven markets. Denver, Austin, San Francisco, and Seattle ranked among the top 10 markets for the sixth straight year.

“Metro Denver’s strong economic fundamentals and steady growth outlook are propelling the region toward the top of investors’ watch lists. Denver’s labor market proved resilient in the wake of the pandemic, and the rise of remote working has boosted migration to secondary markets. Places like Denver offer a competitive cost of living to gateway cities and a compelling quality of life, particularly attractive to the nation’s coveted tech talent,” said Pete Schippits, president of CBRE’s Mountain-Northwest division.

Top 10 Markets for Commercial Real Estate Investment in 2021

Market 2021 Rank 2020 Rank
Austin 1 3
Dallas/Ft. Worth 2 2
Greater Los Angeles 3 1
Phoenix 4 9 (tie)
Denver 5 7 (tie)
Atlanta 6 5
Miami/South Florida 7 10 (tie)
San Francisco Bay Area 8 6
Seattle 9 (tie) 7 (tie)
New York City 9 (tie) 8

 

Key Findings from the 2021 Survey:

  • In a clear sign that risk tolerance is growing, 30% of investors say they are targeting opportunistic and distressed assets in 2021—this is a record level and compares with 16% in 2020.
  • For the first time in the seven-year history of the CBRE survey, large investors (those with assets under management of more than $50 billion) are more interested in secondary markets than primary markets.
  • Pricing will be aggressive for logistics and multifamily assets in 2021, while discounts will be expected for other asset types.
  • Investors are expanding the types of properties on their shopping list, with 72% of respondents actively pursuing investment in one or more real estate alternatives in 2021, up from 54% in 2020. Life science labs, medical offices and single-family rentals are the most popular targets, followed closely by data centers and cold-storage facilities.
  • More than half of survey respondents have adopted environmental, social and governance criteria (ESG) as part of their investment strategy.

 

 

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