According to Statista, the Commercial Real Estate market in the United States is anticipated to reach a staggering $25.37tn in 2024. This projection indicates a significant annual growth rate (CAGR 2024-2028) of 2.66%, leading to a market volume of US $28.18tn by 2028. Interest rates are projected to flatten and decline slightly, so many see 2024 as an opportunity for the market to get back on solid footing. As such, many commercial real estate investors are searching for the best locations for investment opportunities that offer the highest potential ROI.
Regardless of where you choose to invest in commercial real estate, due diligence is critical to ensure that you're making sound investments. Check out LandGate's LandApp tool to access comprehensive property insights and nationwide data to help conduct initial due diligence on investment properties:
Key Takeaways:
The U.S. commercial real estate market is projected to reach $25.37 trillion in 2024, with a CAGR of 2.66% from 2024 to 2028, indicating robust growth potential.
Interest rates are expected to flatten and slightly decline, presenting a favorable environment for real estate investments.
Key factors for profitable real estate markets include high rental demand, strong rental rates, landlord-friendly laws, and potential for property appreciation.
Raleigh, NC: Known for its academic excellence and thriving economy, Raleigh offers affordable property prices and a growing population, making it a prime investment location.
Nashville, TN: With high job growth and cultural prestige, Nashville maintains a competitive real estate market with strong rental returns.
Columbus, OH: Benefiting from steady population growth and economic expansion, Columbus presents opportunities with minimal rent control regulations and increasing home values.
Austin, TX: As a technology and economic hub, Austin boasts high property values and rental rates, driven by major tech company presences and rapid population growth.
Charlotte, NC: A major financial center with favorable corporate tax policies, Charlotte attracts significant investment interest due to its low cost of living and expanding job market.
Denver, CO: Denver's diverse economy and strategic location contribute to its strong property appreciation potential, making it attractive for commercial real estate investors.
LandGate's marketplace and LandApp tool offer resources for investors to evaluate and invest in promising commercial real estate opportunities across these top cities.
How to Find the Best Markets for Commercial Real Estate Investments
Investing in commercial real estate involves a substantial financial commitment, necessitating an analysis of markets and the types of commercial properties that offer the highest potential returns. This often involves identifying opportunities in markets where pricing is favorable. As global economic dynamics change and challenges fluctuate, emerging opportunities in previously overlooked markets await investors ready to capitalize on their next strategic venture.
When investigating commercial real estate investment opportunities, a thorough analysis of local economic conditions is crucial. While large metropolitan areas like Atlanta may appear attractive due to their size, smaller cities frequently present more advantageous pricing for both office and residential properties. This aspect of affordability makes these smaller urban centers particularly appealing to investors, especially those areas experiencing significant population growth, such as the Western United States.
The most profitable real estate markets have similar features. Most importantly, they have a high demand for rentals, leading to more applications and quality tenants. These markets enjoy strong rental rates, free from local rent control, with consistent increases. Optimal markets also have lower interest rates, affordable properties, and landlord-friendly laws. Signs of a good market include a growing population and job opportunities, with competitive investment options. A top market feature is the potential for property appreciation, ensuring long-term value growth and maintenance.
Top Cities for Commercial Real Estate Investing in 2024
Historically, the most rapidly expanding real estate markets have been in Sunbelt states such as Texas, California, Florida, Georgia, and North Carolina. Although these regions continue to experience growth, there's a noticeable shift in the U.S. with individuals moving away from high-cost major cities including San Diego, Los Angeles, Miami, and New York.
1) Raleigh, NC
Raleigh has been a successful city for real estate investors in the past year and will likely continue to be so through 2024. Average home values in Raleigh are up, with an average 7.6% growth rate year-over-year. Additionally, Raleigh is a buyer’s market – properties are becoming affordable to buy, while its population continues to increase. This means the city will see an influx of renters looking for housing, an ideal climate for investors.
Raleigh shines in North Carolina's Research Triangle, known for top schools like Duke University, North Carolina State University, and The University of North Carolina at Chapel Hill. Its academic excellence drives a well-educated workforce, inviting heavy investment in research, tech, and healthcare. The city sees a vibrant student influx, boosting its rental market.
Additionally, Raleigh's strong economy is marked by low unemployment, fostering a booming business environment. With economic stability, educational prowess, and a thriving real estate market, Raleigh stands out as a top choice for investors and residents in 2024.
2) Nashville, TN
Nashville has been one of the hottest housing markets and destination locations for real estate investors for the last several years. It continues to be one of the best cities to buy commercial property in 2024, with a competitive market and steady population growth.
Economically, Nashville is on a growth trajectory, ranking high in job growth among large metropolitan cities. This economic expansion drives a consistent demand for commercial spaces. Nashville’s cultural prestige, known for its country music heritage and landmarks like the Country Music Hall of Fame, adds to its desirability. Between high rental rates, growing returns, and a high overall quality of life, Nashville is attracting investors and renters alike.
3) Columbus, OH
Columbus is one of the many Midwest cities seeing major population and investment growth. Home values have increased steadily year over year, and the city is seeing many young families move to the area compared to more expensive cities. Economic growth and healthcare prosper in Columbus, with an overall GDP increase of over 50% in the last ten years. Healthcare facilities such as the Wexner Medical Center have emerged as hubs for medical research and innovation. Moreover, Ohio's advantageous property laws boost Columbus's attractiveness for real estate investors. Specifically, there are very few regulations for rent control policies and mandatory disclosures. The consistent rise in the city's population highlights its burgeoning role as a key market by 2024, presenting opportunities for investors looking to diversify their portfolios.
4) Austin, TX
Texas’s capital is one of the hottest real estate markets in the country. Austin’s transformation into a rapidly expanding economic center and technology hub has put it on the radar as a great location for real estate investing for several years. Even before the pandemic, Austin was called the “Silicon Hills”, thanks to the considerable tech influence from companies like Apple, Google, Facebook, and Amazon. Other large technology companies, including Oracle and Tesla, have recently moved their headquarters to Austin, highlighting the city's technology boom.
Austin has been ranked as one of the best cities to live in the U.S., and it continues to be a great spot for commercial real estate investing. Rental rates and property values remain exceedingly high, and the high-earning workforce can afford high prices and great amenities. Austin also features a robust job market, extremely high population growth, booming career opportunities, and highly educated residents. The city's central location and land availability make it easier to find and buy reasonably priced lots for developers. New construction is taking over downtown and in the larger metropolitan areas as the city strives to accommodate more businesses and residents.
5) Charlotte, NC
Up next on our list is Charlotte, North Carolina. Charlotte is a major banking and financial center, which has led to extreme population growth and job expansion. The city's appealingly low cost of living combined with a vibrant job market makes it especially enticing for millennials, fueling this growth. Moreover, this demographic shift has led to a surge in consumption and e-commerce expansion, enhancing the city's robust distribution network and drawing a wide variety of industrial stakeholders.
Corporate tax policies in Charlotte are favorable for business owners, leading to great potential for commercial real estate investors specifically. Given the strength of the market and economic fundamentals, both demand and development activities in Charlotte are anticipated to gain even more momentum.
6) Denver, CO
Denver has become a premier destination for commercial real estate investors, tenants, and companies looking to relocate or grow, driven by its booming economy, varied industrial sectors, and talented workforce. Its strategic position in the heart of the United States, together with a robust transportation network, positions Denver as an appealing center for business and commercial activities.
Denver boasts a robust and diverse economy, underpinned by a mix of established and emerging industries. Additionally, the metropolitan area has experienced strong population growth over the past decade. Denver is also in the top 10% nationally for property appreciation, presenting commercial real estate investors with a unique opportunity to drive high ROI. Overall, the city presents itself as an economically booming location, offering various opportunities for commercial real estate investors.
Commercial Real Estate for Sale
Investing in commercial real estate presents a unique opportunity for individuals looking to diversify their portfolios or business owners seeking an additional source of income. With the help of LandGate's marketplace and platform, investors can find and evaluate commercial properties in some of the hottest real estate markets in the country. Whether it's a booming city like Denver or a technology hub like Austin, there are various opportunities for commercial real estate investors to thrive in today's market.
Prospective commercial property owners and commercial property investors can use LandGate's free marketplace to find properties for sale across the country, filtering listings by property type, location, price, and more:
By utilizing LandApp, commercial property investors can get more data about commercial real estate and conduct due diligence. For just $10 per month, the tool offers valuable data such as property details, ownership history, valuations, amenity information, and renewable energy lease estimates (rooftops, land, parking lots):
