The eyes of Texas — and the entire world of commercial real estate — appear to be upon Austin.
In a new survey from commercial real estate services company CBRE, commercial real estate investors rank Austin first among U.S. metro areas for investment prospects in 2021. Austin knocked Los Angeles off its previous first-place perch. Dallas-Fort Worth comes in at No. 2, with Los Angeles holding down the No. 3 spot.
Austin appeared at No. 3 in CBRE’s 2020 survey and No. 11 in the 2019 version. Dallas-Fort Worth ranked second in 2019 and 2020, while LA ranked first in those two years.
“The Sun Belt markets of Austin, Dallas, Phoenix, and Atlanta were among the top-performing metros where the least number of jobs were lost in 2020,” CBRE says in its survey findings.
For the first time in the history of the CBRE survey, big-time investors (those that manage assets of more than $50 billion) preferred smaller markets like Austin and Dallas-Fort Worth over mega-markets like New York City and San Francisco.
CBRE says markets such as Austin and Dallas-Fort Worth “will see intense competition for good-quality assets from all types of investors.”
At the same time, commercial real estate services company JLL names Austin one of the “rising star” cities for investment in the U.S. Also in that category are Dallas; Denver; Charlotte, North Carolina; Miami; Nashville; and Raleigh, North Carolina. JLL cites population growth and job growth, as well as a lower cost of living and shorter commute times than places like New York City and San Francisco, as reasons for its bullish outlook regarding “rising star” locales.
Mike McDonald, vice chairman at commercial real estate services company Cushman & Wakefield, recently told The New York Times that Austin is “the hottest market in the country right now.”
“Millennials are moving to the Sun Belt, and companies are following the millennials. Investors are following the companies,” McDonald told The Times.
Ari Rastegar is founder and CEO of Austin-based Rastegar Property Co., which owns apartment, office, and industrial properties in U.S. markets such as Austin and Dallas.
Rastegar says Tesla’s recent announcement of a new factory just outside Austin and Oracle’s recent decision to shift its headquarters to Austin build upon earlier investments by Amazon, Apple, Facebook, and other companies in the region.
“These tech giants understand the rich access to talent, the friendly business environment, and the superb standard of living that Austin offers, so it only makes sense that it’s the hottest market in the country,” Rastegar says.
It’s also no surprise that Dallas-Fort Worth ranks second in the CBRE survey, he says.
“While Austin has become one of the fastest-growing tech hubs globally, Dallas has long been the financial center of the state and Sun Belt region, benefiting from the tremendous … educational institutions that are located throughout the metro,” Rastegar says.