Losing some luster
San Antonio falls in new ranking of top markets for real estate investors
The investment market for offices and other commercial real estate in the U.S. is slightly cooling off in San Antonio but heating up in Dallas-Fort Worth. That’s the upshot of a new forecast from professional services firm PwC and the nonprofit Urban Land Institute.
In the forecast, released October 10, San Antonio ranked No. 20 for investment prospects in commercial real estate in 2019, including office, retail, and industrial properties. That's a two spot drop from 2018 when Alamo City ranked No. 18.
R. Byron Carlock Jr., U.S. real estate leader at PwC and co-publisher of the report, says San Antonio slipped in the ranking thanks to a “herd mentality” among commercial real estate investors. “The drop in the rankings is more a reflection on investors looking for less ‘crowded’ opportunities," says Carlock. "This does not suggest that there are looming problems in those markets.”
The same holds true for Austin, he says. Austin saw a one-year drop from No. 2 to No. 6 for 2019.
Dallas-Fort Worth took the No. 1 spot, up from No. 5 in the 2018 forecast. Rounding out the top five is Brooklyn, New York; Raleigh-Durham, North Carolina; Orlando, Florida; and Nashville.
As San Antonio and Austin fell, DFW jumped four spots. Carlock cites DFW’s workforce, diverse employment base, favorable tax situation, and robust startup environment for the region’s climb to No. 1.
“We are late in the economic recovery cycle, and while this may continue for a while, real estate investors are focusing on those markets that are best positioned to grow over the long-term,” Carlock says. “DFW is expected to grow more than two times faster than the overall U.S. population, meaning people want to live and work in the DFW area, and employers are taking notice.”
In turn, those employers need space for their employees, giving a boost to the DFW office market. As such, a recent report from commercial real estate platform CommercialCafé ranks DFW as the third hottest market for office construction, with Austin landing at No. 7 and San Antonio at No. 26.