Anyone who hopes to succeed in the real estate industry needs to stay up to date on the latest market trends. Whether you’re an investor or a broker, you’ll have to keep an eye on which areas have properties with high growth potential and which ones are stagnant or declining.
If you’re looking for a promising real estate market to invest in, look no further than these recommendations from Forbes Real Estate Council. Although some of these sectors or markets have underperformed in the past, our expert panelists predict big growth here over the next 12 months.
Look for these opportunities in the next year.All photos courtesy of Forbes Councils members.
1. Last-Mile Warehousing
I believe that the shift to “last mile” distribution models in the commercial/industrial real estate arena will continue to drive values up for older, less-functional warehouses that are located adjacent to population centers. Specifically, around CBD and inner core urban areas, these buildings have been overlooked for years due to their multistory nature and low ceiling heights. - Nathan Anderson, NAI Heartland
2. Underutilized Neighborhood Assets
The opportunity to leverage under- or non-utilized assets in this economy is fascinating. In the urban market, new technologies allow residential properties to sell things like parking spots that are not in use. Creating an exceptional experience here with traveling services (massage, hair, nails, food shopping, etc.) creates an optimum experience as well as maximized results. - Susan Leger Ferraro, Peace, Love, Happiness Real Estate
3. Condos And Vacation Homes As Investments
With interest rates on the rise, first-time buyers will see their overall affordability affected. Rather than aiming to buy a forever home, buyers will shift into purchasing less-expensive condos or vacation homes as investments. Becoming a landlord (or even Airbnb host) will be the best way to make the most of your property purchase. - Beatrice de Jong, Open Listings (YC W15)
4. Opportunity Zones
Opportunity Zones are previously underperforming markets that everyone should have great expectations for in 2019 and beyond. In 2017, there wasn’t a ton of clarity from the administration as to the rules surrounding the tax benefits of Opportunity Zones, but as the IRS provides more clarity on the subject, investors will defer or eliminate capital gains taxes by pouring cash in these micro markets. - Blake Janover, Janover Ventures
5. Class B Industrial Real Estate
I believe you will see a lot of capital flow into Class B industrial CRE. These properties often are in infill locations, can be purchased well under replacement cost, offer affordable rents and cover a lot of land. Due to size, location and affordability, you’ll see unconventional tenants reimagine the use of these spaces, which could lead to increased rent growth and value creation. - Chris Powers, Fort Capital, LP
6. The Bahamas
The Bahamas have been on their knees after several hurricanes and the global financial crisis in 2008. But now is the time in the cycle where things turn around for this amazing Caribbean island. Waterfront properties are selling for ten cents on the dollar compared to the Florida market, which is only a 20-minute flight away. - Engelo Rumora, List’n Sell Realty
7. New York City’s Lower East Side
Attributes like more local retail brands setting up shop, an emphasis on maintaining a unique neighborhood environment, and a resurgence in LES has led to savvier real estate investments in single and portfolios of luxury properties for landlords, renters and buyers. Also, new developments are making once-underwhelming areas more habitable. - Louis Adler, REAL New York
8. Skid Row, Los Angeles
The infamous neighborhood may have a lot of obvious problems, but it is walkable and close to transit, benefits from favorable zoning and is surrounded by other rapidly appreciating neighborhoods. As an island of affordability, it’s the last inexpensive area in DTLA, and that differential is rapidly balancing out — four major projects are on the books and it’s a harbinger of much more to come. - Ari Afshar, Compass
9. Kansas City
An underperforming market I see growing in 2019 is Kansas City, MO. It’s been a top market for new construction and with a 52% YoY growth in new development spend, it means the city is poised for a good year ahead. - Nathaniel Kunes, AppFolio Inc.