Understanding the Real Estate Investment Scenario of 2014

We are already almost halfway through 2014 and real estate is once again becoming a bright investment avenue. Commercial estate investors are becoming more and more optimistic. As per an annual report released by the Real Estate Research Corporation (RERC), Deloitte and the National Association of REALTORS® NAR, though the economy has exhibited uncertainties, the steady growth (of real estate) is expected to continue. In fact, commercial estate investment has grown into secondary and tertiary markets too. Investors have started moving into smaller, non-metropolitan areas. These areas have shown higher opportunities thereby attracting substantial investment.

Investment Patterns

  •  The apartment sector topped the investment scenario for the first 3 quarters of 2013 generating $71.8 billion in sales.


  • Office properties followed as a close second with sales worth $63.8 billion.



The Apartment Market

 This sector is considered the strongest player when it comes to real estate investment. It has shown a year-on-year increase of 51% of sales, marking a record performance. 2014 seems to be showing a moderate but promising growth rate so far. Among the types of properties, apartments with gardens have shown the highest growth. Quite clearly, investors continue to favor this arena of real estate investment.

As suggested by Jeff Adams, the best practice for any investor is to get a second-home and put it up for rent. This is by far one of the safest and most beneficial investment practices of all times.

The demand and availability of financing options are likely to keep the apartment sector a steadily growing investment option through all of 2014. The rate of home ownership has been falling consistently over the last 20 years from 69% in 2004 to 65% in the third quarter of 2013. This has positively affected the rental income.

The Office Market

 Nearly 7 million jobs have been created since the 2008-09 recession. This has led to a positive growth in office space investment. The sales in this sector rose despite increasing interest rates. Suburban office spaces have generated the largest amount of sales owing to the untapped opportunities. The demand for office spaces has come in mainly from private investors, banks and cross-country investors, particularly from China, Korea, Brazil, Kuwait, Singapore and Norway.

2014 continues to be optimistic for the office market. Higher taxes have been a letdown for the rate of employment, yet the demand for office spaces is likely to grow. 36 million square feet of office space is expected to be added to the existing proportion. Office properties in USA are appearing very appealing to the global market.


The Retail Market

 November 2013 showed a 2.1% increase in year-over-year same store sales. This rate was less than the estimate 3.5 – 4.5%.  However, sales of significant retail properties showed a 25% rise as compared to the nine-month period (till September) in 2012. Cap rates have remained constant over the years.

Outlook for the retail market continues to be optimistic. Investors are interested in assets other than those in Class A. Rents are also expected to improve further.

The Industrial Market

This sector is favored among investors as the underlying basics continue to improve. As the demand for large warehouses grows, pace of construction is also expected to rise. Los Angeles, San Bernardino, Fort Worth, Dallas, Atlanta and Chicago dominate the warehouse leasing section. Rents for R&D departments have risen by 4% and those for warehouses have risen by 2.5%.

As the demand of the housing sector increases, the demand for furnishings, appliances, etc. is expected to grow. This will create additional demand for industrial production and thereby industrial spaces. The investment in this sector is likely to be steady.

The bottom line here is that the real estate investment scenario in USA for 2014 seems to be positive on all fronts. If you wish to sustain yourself in this arena, make sure you have the right kind of advisors at hand. Experts like Jeff Adams recommend a strong plan of action when venturing into real estate investment. It can be one of the most profitable avenues when considered wisely.