Austin is rife with investment opportunity. We have one of the most desirable rental markets in the U.S., and commercial real estate is booming, too, according to the 2017 Investment Intensity Index from global financial firm JLL.
The index "compares the volume of direct commercial real estate investment in a city over a three-year period" to get an idea of how fast a market is growing. JLL analyzed 150 global cities total to determine the top 30; Austin makes a surprise appearance at No. 23, ranking above strong international markets like Hong Kong, Tokyo, and Toronto.
"These smaller powerhouses [Austin, Raleigh-Durham] are punching above their weight in proportion to their local GDP and going head-to-head with highly globalized markets that are traditionally more attractive to investors," says a release.
The evidence? From 2014-2016, commercial real estate investment in Austin totaled $9.5 billion, and Austin's GDP was an impressive $113 billion. Based on those figures, JLL calculates the city's "investment intensity" at 8.5 percent. To put that into perspective, New York's investment intensity is 10.6 percent.
JLL looks at commercial real estate investment in four sectors: retail, office, hotel, and logistics. Retail is the only Austin sector that appears in the global top 20, but experts expect that to change. Jeff Coddington, senior vice president with the capital markets group in Austin, tells CultureMap that he "would be surprised if I didn't see more of these sectors start to show up in the top 20 list, offices in particular."
"Global competition continues to intensify and investors are targeting small to mid-sized cities. It's changing the investment landscape. New world cities in the U.S. that excel in innovation and transparency are now firmly on global investors' radars as they look to tap into their dynamic economies," says Jeremy Kelly, JLL director of global research.
JLL points to Austin's tech industry, including the prevalence of big-name companies, and huge millennial workforce as key factors to our success. Lack of state and local income tax is an added bonus.
"There's tremendous incentive to invest in Austin," says JLL's capital markets managing director Tim Jordan. "Our state's business-friendly environment is attracting Fortune 500 companies every day. The market's blend of innovation, job growth, and low cost of living creates a unique culture that appeals to top talent nationally and fosters continued growth. We fully expect this momentum in Austin to continue."