Top CRE Assets To Pay Attention to in 2024
Terrydale Capital
Feb 9, 2024 6 Min read
As we persist into 2024, investors continue to ask the question of what commercial real estate assets will rise to the top and provide the best overall opportunity for them. While many professionals have labeled the outset of the year as one of cautious optimism, there have been signs pointing to later in the year where certain assets will have increased opportunity for investors. We, as well as the insights of other commercial real estate professionals such as Blackrock, have outlined a variety of assets that investors should keep an eye on through the year.
Multifamily
Multifamily assets in key suburban areas will be a large area of opportunity in a variety of ways, despite some tentativeness noted by varying professionals. Distressed properties have been a major point of focus amongst different voices as an area of enhanced opportunity. Bloomberg reported an astonishing excess of $218.1 billion in potential distress with $82.8 billion in actual distress. Of the $83.8 billion, $67.1 billion is multifamily distress. Investors can expect discounted prices, value-add potential and diversification opportunities.
Retail
Retail assets in key metropolitan areas are noted by Blackrock to hold opportunities as they serve as a complement to growing areas. Growing areas that are undergoing population booms, technological advancements or are home to intentional tourism are expected to boast great opportunities for retail investment for CRE investors to keep a close eye on. With retail centers now keeping updated stocks and engaging in higher shipping activity with a slowly reviving economy, logistics centers, in tune, are benefitting from the increased activity.
Industrial
Industrial assets, in general, have remained a relatively sturdy asset class with some industrial sub-assets performing better or worse than others. General warehouse assets performed sturdily through the year with self-storage activity seeing a relative slowdown due to high interest rates. However, as interest rates continue to lower, activity will continue to build. Logistics centers saw a large hit in 2023 with a plunge in shipping activity. However, shipping activity began to rebound in early January as the freight recession continued to recede. As stated prior, this activity goes hand in hand with in-store retailers maintaining orders and upkeep their stock. Despite this, industry experts still express cautiously optimistic outlooks on the future.
Data Centers
Data centers have seen a growth in interest and development through 2023. Despite the tougher market of last year, data centers rose to the top as the most promising newer asset class to invest in. As big data continues to grow with additions such as artificial intelligence and companies move to digitize more and more, the demand for data storage grows. Data centers themselves are a unique asset amongst others as the overall building structure is not the only part of interest. Internal servers, networking infrastructure, cooling systems, power systems and other internal infrastructure are the main piece of interest to tenants. Well positioned data centers can appreciate in value over time due to scarcity of suitable locations, high entry barriers and the increasing importance of data infrastructure.
In Conclusion
As we continue to wade our way into the new year with cautious optimism, investors can begin to plan out their investment strategy by getting in the market and studying the positive trends. As always, it pays to have the right team at your side to help ensure the most successful results in your investment journey. When you need the right team, Terrydale Capital is ready to assist in your journey. Contact us today.
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