Small multi-family markets will remain the best bet based on market performance and return on investment. The trend leans toward suburban areas, according to research by the CBRE Real Estate Market Outlook 2020.
The suburban multifamily market will surpass the urban market by 2020, maintaining a lower vacancy and achieving greater income growth. Multifamily demand will remain sufficient to absorb most of the new supply and reduce concessions in oversupply markets.
But, in addition to the obvious reasons (economic, demographic, etc.), there are two basic reasons that make the suburban multifamily market attractive, which also allow to predict its growth.
Infrastructure: The economic growth and importance of a given area depends mainly on its infrastructure. Investments in water, sewage, energy, transport, health and education systems in suburban areas increase as urban areas grow rapidly.
Geography: The geographical location of suburban markets facilitates the transport of manufactured goods and services to both large corporations and small companies. These areas also have large industrial parks, which provide countless jobs to benefit the growth of the economy.
Everything allows its inhabitants a better quality of life, facilitates their connectivity to health, markets, education, industries, etc., and therefore drives the values of the real estate market and its estimates of appreciation.
At Capitaliza, we focus on the Multifamily Suburban market, taking into account, among other things, the accelerated connectivity that these areas have developed in the southeastern United States, the transfer of large corporations to their industrial parks and the cash flow profitability that their properties generate in the short term.