Commercial real estate recovery in Boston could create many new jobs
At the end of the summer, stronger housing markets in 20 of the Fed's 12 regional banking districts helped boost economic growth in the United States. This comes from a Federal Reserve survey released in early October 2012, and additional signs of real estate growth have been reported throughout the month.
Recently, growth and strength have both been noted of Boston's accelerating residential and commercial housing markets. Homes for sale in Boston are in demand, and many popular neighborhoods are attracting small business owners.
Boston made the list of the top 10 U.S. cities where commercial real estate recovery will soar dramatically in 2013, with gains in leasing, rents and pricing across all property sectors. This recognition comes from the Urban Land Institute's Emerging Trends in Real Estate Forecast, and the only cities to edge out Boston were San Francisco, New York City, San Jose, Austin and Houston.
The report cited Boston's increase in high-technology and biomedical research and development employment as the number one reason for an uptick in investor interest. With companies migrating to Seaport and Cambridge at impressive rates, home values in those neighborhoods have the potential to increase.
In addition, U.S. property sectors will register higher metrics in 2013 compared to 2012 due, in part, to recent job creation occurring nationwide. The increase in employment opportunities should be enough to absorb open commercial space and lower vacancy rates in the office, industrial and retail sectors, the report suggests. All of this recovery in commercial real estate will affect growth and stability in single-family home sales, condominium closings and multi-family home exchanges.
Investment capital's interest in commercial real estate will increase as other asset classes continue to flop, according to the Boston Business Journal. Transaction volume and prices will rise in 2013, but upticks will be smaller until credit markets return to pre-recession rates. Currently, economists expect that commercial mortgage-backed securities (CMBS) issuance can return to a $75 billion to $90 billion level over the next few years, the source reports. This rise in return will draw more investors to the commercial real estate sector, which creates jobs in certain metro areas, drives prospective homebuyers to go through with closings and improves real estate values as a result.
With the commercial real estate market bright in Boston, homebuyers should consider an investment in property in the Hub to take advantage of potential work opportunities down the line. Many experts predict 2013 to be a year full of economic recovery, and Boston continues to prove it's on the right path.