Trepp Ranks the 15 Top Metro Areas for CRE Investment Potential

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Trepp has released new research on the 15 top metropolitan areas in the country and their potential for commercial real estate investment based on their financial performance.

The San Jose MSA is the top MSA for CRE investment potential thanks to its best-in-class delinquency, occupancy, and unemployment rates.

The West Coast’s heavy tech presence boosted the top-ranked areas while a more stagnant Midwest pulled a few markets toward the bottom of the list.

Trepp, LLC, the leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has published new research on the 15 top metropolitan statistical areas (MSA) and their potential for commercial real estate investment. The report can be requested by filling out the form here: https://info.trepp.com/trepps-ranking-of-the-15-largest-msa-pr.

Based on a multitude of economic and commercial real estate data used to formulate the overall ranking, the San Jose, California MSA tops Trepp’s ranking of the 15 top MSAs in terms of investment potential. San Jose has the best delinquency rate, average occupancy rate, and unemployment reading of the 15 MSAs measured. The San Francisco, California, and Seattle, Washington MSAs finished in second and third, respectively, in Trepp’s study.

"Our ranking of the top 15 MSAs gives market participants a sense of how these markets compare to each other across commercial real estate and more general economic factors," said Joe McBride, Director of Applied Data and Research at Trepp. “The West Coast’s heavy tech presence boosted the top-ranked areas while a more stagnant Midwest pulled a few markets toward the bottom of the list.”

Trepp called upon six data variables to rank the markets in its study. Once data was collected, Trepp researchers conducted a multiple regression to test the relative importance of each variable and assign a weight to that variable. In addition to key data such as employment numbers and population growth, Trepp used the following criteria from their own commercial loan database as of Q2 2018 to tabulate their rankings:

  • The volume of CMBS loans issued compared to the prior period.
  • The percentage of CMBS loans marked as delinquent.
  • The average debt service coverage ratio (DSCR) level weighted by each loan’s outstanding balance.

The two largest US MSAs, New York City and Los Angeles, were ranked seventh and eighth, respectively. Both metros have average occupancy rates but suffer from relatively high unemployment and stagnant population growth. The worst-performing MSAs were the Detroit, Michigan and Philadelphia, Pennsylvania metro areas.

For the complete list of metro areas and corresponding statistics, request Trepp’s ranking of the 15 Top MSAs: https://info.trepp.com/trepps-ranking-of-the-15-largest-msa-pr. For daily CMBS and CRE commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency and investment performance. From its offices in New York, San Francisco and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by Daily Mail and General Trust (DMGT). For more information, visit http://www.Trepp.com.

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Sean Barrie
Trepp
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