Investment In Trophy Buildings In Secondary Markets Is Sky-High
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Trophy buildings in secondary U.S. markets are becoming hot commodities as investors look beyond primary markets like New York, San Francisco and Boston to store their cash.
Both domestic and foreign buyers have been actively investing in trophy assets and high-rise acquisitions in suburban markets as of late, spending $1.2B more on these assets last year than in 2015, JLL reports. Occupancy rates for skyscrapers have increased for the eighth year in a row, with vacancies hovering around 10% nationally. Overall office sector vacancies neared 13% as of the first half of 2017.
JLL Director of U.S. Office Research Scott Homa attributes the increase in high-rise occupancy rates to low-rise spaces in urban markets having been picked over by creative firms in recent years, forcing companies to look up when it comes to securing new office space.
Financial services and law firm companies continued to lease the most space in high-rise properties, as of the first half of the year. There was also a growing interest from creative firms in the tech, advertising, media and information sectors flocking to skyline assets in suburban markets now that landlords are more willing to offer the amenities and modern designs desired by creative companies today.