Use these regional research tools to gain invaluable insight into Commercial Real Estate investment opportunities

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National vs Regional Analysis

National and international events, like major recessions, COVID, etc. can impact almost every major real estate market in some way. High national unemployment can infect local markets with sickening lethargy. As we have seen in the past, even a localized crash in Manhattan in collateralized mortgage back securities can send shockwaves across every region. Similarly, global and national growth periods can be enough to rejuvenate many local markets.

However, many times regional markets can be immune to national influence. Learning where and when those strong points are comes from regional research and knowledge. Regional resources may seem less available for investors and developers, but some of these resources can be helpful.

Regional Corollaries for Commercial Real Estate Growth

Regional Job Growth, Population Growth, Income, Tax Environment

Before wasting hours filtering through low correlating factors, it helps to narrow down some regional variables that trend positively with successful investment opportunities in the CRE space. Some of the highest correlating regional factors are job growth, unemployment, and population growth. Align positive figures of these factors may help your investment prospects more than others. However, further constituent examination may be needed. To illustrate, if an investor were interested in Industrial real estate and the overall job growth rate of a region was positive, he might be grateful to learn that the bulk component of the general growth rate came from the professional sector (legal, finance, IT, etc.), which generates tenants in Office real estate more than Industrial.

Insightful Regional Sources

Economics

Often at the end of their reports CBRE Regional Reports provide the overall unemployment per region as well as YOY Job growth rate by industry by CRE type, such as the Financial Services growth rate color coded within the Office sector or the Transportation growth rate color coded within the Industrial sector.

Newmark engages in the CRE quarterly insight report space as well, and their figures usually complement rather than compete with those of CBRE. They also provide job growth rates but with different graphics that can lend further insight.

BLS.gov has excellent labor statistics on each market across the country, broken down by labor type. It also shows the TTM growth rate of each of those submarkets. Some of those growth rates can be helpful in construction plans or portfolio balancing. There are regional websites in each state’s websites that are also useful. For example, Utah has a workforce data site with a substantial amount of free economic data. However, we have found some of its subsites less reliable (with sites simply not functioning) than those of the bls.gov site at times.

New Construction/Net Absorption/Leasing Activity

CBRE Regional Reports provide an excellent overview of CBD and Suburban markets in just about all significant markets. They provide them quarterly in a consistent, easily digestible format.

For example, the chart below juxtaposes the submarkets of SLC in a quickly digestible format. Focusing on Sandy South Towne, for example, we see relatively average vacancy and lease rates. But that is not a complete picture.

The subsequent chart not only provides all the data above in a table format but also adds total SF in the submarket of Sandy South Towne. Using the information of nearly 6M SF in the area and the 16.5% total available space, we can calculate that there is nearly 1M SF vacant space in the Sandy South Towne submarket alone.

Though these are great regional resources, these levels of analysis stop short, out of manageability, of all levels of needed information. For example, within this Sandy South Towne submarket exist several micro markets. On the east side of the freeway there is a pocket of deeply vacant, older office buildings, and the prospects do not seem bright. However, on the west of the freeway, there is a large office park of newer office buildings that have attractive growth. That is where we come to local insight.

With some variance, Newmark provides tenant company names in newly signed, major leases in a market. They may also provide recent sales with buyer information. This deeper view of the constituency of the submarkets can help lead investors to more immediate action.

Local Insight

The purpose of this paper is to highlight regional resources for analysis; however, we would be neglectful if we did not include the value of micro-market insight from local experts.

Though the reports of well-known firms provide helpful figures of the market overall, local brokers will be able to tell you specific names of companies making the moves. Colliers, CBRE, and Newmark are a few of the national firms that have professional and knowledgeable brokers. Consider connecting with the appropriate regional brokerages as well, as they may specialize in your area even further. Brokers in general frequently keep abreast of specific tenants’ preferences. For instance, they may know which companies are not planning on renewing their leases and why, be it reduction in workforce due to remote work or moving due to a property shortcoming. If a CBRE says that overall Healthcare YOY job growth is up 4% in Denver, a downtown broker might know the particular companies that have moved in or increased hiring and why.

A healthy relationship with several in touch local brokers can be critical to many successful commercial real estate deals.

Fee Based Sources

The sources mentioned above are free to the public. Their goal, among others, is to serve investors to the point of becoming investing partners with them. Other resources have a more singular objective: provide raw, hard-to-acquire data that is valuable to investors.

In particular, Reonomy.com has an immense database of elusive data on commercial real estate owners, contact info, and price history. Their website opts not to assess properties but provide the data you need for your own analysis. They have a 7-day free trial period in which you can download data. After that, their individual pricing is $49/mo while enterprise pricing varies but expect an annual subscription cost of a few thousand dollars.

Other fee based sources for raw datasets are S&P Global, CoStar, among others.

Wrap Up

National data can, at times, be the easiest to find, and, for purposeful real estate investors, it is often the least useful. Research into regional data, as specific as it can be, is a high yielding effort. Weaving together reports from various brokerages brings a useful picture together of a certain market or submarket. Tessellating those reports along with micro-market insights from local brokers and a firm’s own boots-on-the-ground efforts can bolster an investor with actionable data, assisting him in making a profitable venture.

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