Tech Heavy Employment Centers Drive Rental Rates Up

Rents are on the rise in the first quarter of 2013 thanks in large part to sustainable employment opportunities available in tech-centric markets like Boulder, Denver, Austin, Seattle and Raleigh.  For nearly a decade, investors have poured money into emerging high tech markets all over the US to rival California’s Silicon Valley,– building business parks, high end retail and luxury apartments.  Now these markets are established economic centers.  These markets are fully loaded with urban amenity goodies — a beacon for top talent from around the globe.

RealFacts publishes the results of its first survey of the year and found rents are up.  The national average increased by $12/mo. from $1,040/mo. in the 4Q12 to $1,052/mo. in 1Q13.

Boulder, CO, high tech host of  IBM, Oracle, Seagate Technology (among others)  lead the quarter with a $55/mo. average rent increase from $1,173/mo. to $1,228/mo. San Jose comes in second place up $38/mo. from $1,956/mo. to $1,994/mo.  Seattle took bronze, up $33/mo. from $1,159/mo. to $1,192/mo. Denver turned in a respectable performance, up $22/mo. from $1,001 to $1,023.  And the surprise to us this quarter was a $20/mo. increase in Sacramento, up from $957/mo. to $977/mo.

Occupancy is stable this quarter with no change for its quarter over quarter average percentage rate of $93.8%.  Markets filling their available units fastest were found in Vallejo CA up 1.8% from 94% to 95.7%.  Oklahoma City was up 0.8% from 92.6% to 93.8%.  Other markets on the rise are Houston and Las Vegas, up 0.8% respectively.  Markets losing renters are Salt Lake, down 1.8% from 94.9% to 93.20%; Durham, NC down 1.2%; Greensboro, NC and San Diego, CA both down 1.0% and Boise a shade below at 0.9%.

Each year, RealFacts examines the sales trends from its database for the previous year.  Sales volume in 2012 was down by about 39,000 units from 2011 or roughly $10 billion vs. $13.4 billion.  Of the $10 billion, $3.6 of that figure was sales occurring in California.  Arizona had the second highest volume in 2012 of $1.3 billion comprising 52 communities or 15,772 units.  In third place is Florida at $1.1 billion from 45 communities.

Favorite investment real estate strategies in play for 2013 include:  Buy a real estate investment company; buy a real estate portfolio directly from an established brand name company; buy a supersized apartment community (300+ units); buy the unwanted assets (workforce housing) of a core market investment company; buy value add assets in under the radar (protected) cities located in and around core markets; buy sub $100K/door in any promising location; any combination of the above mentioned strategies.

West Coast Commercial Real Estate News